FPIs turn net sellers after week-long volatility, exit with .02 billion despite RBI rate cut

Foreign Portfolio Investors (FPIs) concluded the week ending June 6, 2025, as net sellers worth $1.02 billion from Indian markets, marking a sharp reversal from the previous week’s net inflow of $705 million. The week witnessed significant volatility in FPI flows, with massive outflows in the initial days followed by a recovery toward the weekend.

The first three trading days saw the heaviest selling pressure. On June 2, FPIs recorded the largest single-day net outflow of ₹18,241.87 crore, with equity investments alone witnessing net sales of ₹5,003.74 crore. June 4 saw another major outflow of ₹7,025.27 crore.

“The initial three days saw significant outflows, with FIIs withdrawing approximately $1.22 billion. This bearish sentiment was triggered by renewed US-China trade tensions and rising US bond yields, which steered investors towards safer assets,” said Himanshu Srivastava, Associate Director at Morningstar Investment.

Source: NSDL Note: Figures in brackets indicate net outflows

The week’s pattern showed June 3 with net outflows of ₹2,733.93 crore, followed by June 4’s ₹7,025.27 crore outflow. However, sentiment began recovering on June 5 with net outflows reducing to ₹2,009.79 crore.

On June 6, FPIs turned marginally positive with net outflows of just ₹181.39 crore, with equity markets showing net inflows of ₹49.41 crore, coinciding with the RBI’s announcement of a 50 basis points repo rate cut along with a 100 basis points reduction in Cash Reserve Ratio.

“The aggressive RBI rate cut, backed by cooling inflation and a steady GDP outlook, is likely to support investor confidence amidst the ongoing global uncertainties,” noted Vinod Nair, Head of Research at Geojit Investments Limited.

Despite the week’s net outflows, FPIs have remained net buyers in June 2025 to the tune of ₹4,575.59 crore, according to Shrikant Chouhan, Head Equity Research at Kotak Securities. “FPI flows are expected to remain volatile,” Chouhan noted.

The debt segment saw consistent outflows throughout the week, with Debt-General Limit, Debt-VRR, and Debt-FAR categories all recording net sales. On June 2, total debt outflows reached ₹13,283.53 crore across all debt categories.

In the derivatives segment, FPIs maintained active participation with significant trading volumes across index futures, options, and stock derivatives throughout the week. On June 6, index options trading reached 18.97 million buy contracts and 18.89 million sell contracts.

“After initiating the week with consolidation, the domestic market exhibited resilience amidst concerns over tariff wars and geopolitical escalations,” said Nair, highlighting how the market recovered despite initial pressure.

Market analysts expect FPI flows to remain sensitive to global developments, while domestic factors like the RBI’s monetary policy stance will continue to influence investor sentiment in the near term.