FPI Sell-Off Pushed Drop of 4% in Nifty50 in February 2025

The Nifty50 index has dropped over 4% in February 2025, primarily due to a sharp sell-off by foreign portfolio investors (FPIs) and weaker-than-expected Q3 earnings. This month, FPIs have offloaded more than $4.5 billion worth of Indian stocks, contributing to a total sell-off of $25 billion since September 2024. As a result, the index is on track to close in the red for the fifth consecutive month, marking the longest losing streak since 1996.

Why Market Fell During February 2025?

The initial decline in the market was triggered by concerns over stretched valuations and slowing economic growth. Recently, however, the sell-off has intensified, driven by rising US bond yields and a stronger US dollar, which have made Indian markets less appealing to foreign investors.

Foreign Investment Withdrawals

After an outflow of nearly $11 billion in October 2024, foreign investors pulled out an additional $2.7 billion in November and $8.4 billion in January 2025. However, December saw a reversal, with foreign investors turning net buyers, acquiring $1.3 billion in Indian shares.

On February 27, 2025, FPIs sold an additional $372 million worth of Indian shares, bringing the total outflows for the year to nearly $13 billion, as reported in various news reports

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