FPIs pull Rs 5,040 crore from equities in biggest sell-off since June

Foreign portfolio investors dumped Rs 5,040 crore worth of Indian equities on Friday, delivering the sharpest blow to market sentiment in nearly three months. The sell-off effectively reversed the bulk of inflows recorded throughout August, compressing the month's net foreign buying to just Rs 454 crore.

The magnitude of Friday's exit signals renewed caution among overseas investors regarding Indian asset valuations or broader emerging market headwinds. It represents the most substantial single-day portfolio outflow since June 8, indicating a significant shift in foreign investor appetite after a period of relative stability.

Domestic institutional investors stepped in to absorb some of the selling pressure, with DIIs purchasing equities worth Rs 5,184 crore during the same session. The domestic counter-buying helped cushion the market impact of the foreign exodus, preventing sharper declines in benchmark indices.

The development comes at a critical juncture for India's capital markets, which have relied heavily on foreign inflows to sustain growth momentum. Market participants are closely monitoring whether Friday's sell-off signals the beginning of a broader FPI withdrawal or remains an isolated incident amid global market volatility.