A good way to look at FPI tilt is to look at data for 4 years. There are some interesting findings. Over last 4 years, total FPI inflows into India were ₹1,75,042 Crore. But this macro picture glosses some micro facts. If you add up the 4 calendar years, FPIs have been net buyers in debt worth ₹2,83,355 Crore, but sold equities worth ₹ (1,08,313) crore. We can break-up equity flows further. FPIs net selling of ₹ (1,08,313) crore comprises of IPO inflows of ₹2,63,176 crore and secondary market equity outflows of ₹ (3,71,489) crore. In short, secondary market selling in equities by FPIs has been intense.  

There are 3 things that strike about FPI data over the last 4 calendar years. 

1. Debt flows turned positive from 2023, when Indian government bonds were included in the global bond indices for the first time, triggering bond index passive flows. 
2. The FPI flows into IPOs in 2025 is nearly 40% lower compared to 2024, though total IPO collections were same. MFs and AIFs are now more prominent as anchor plays. 
3. Valuation concerns are a lot more prominent in the secondary market equities, where FPIs have net sold $45 billion in the last four calendar years. 

One thing that stands out has been that the direction and colour of FPI flows into Indian markets have been largely driven by specific events. 

1. Most FPIs have been concerned about India’s Buffett ratio persisting above 120 levels for most of 2025. That has led to the massive selling in secondary equities. 
2. In the last 18 months since the coalition NDA government was elected for the third time, FPIs have been cautious and concerned about continuation of reforms process.
3. IPOs elicited a lot of FPI enthusiasm in 2024, but as valuations got richer and less was left on the table, FPIs have reduced their exposure to Indian IPOs too.
4. FPI surge in bond market participation has been a combination of the inclusion of Indian sovereign bonds in the global index; and rate cut expectations.
5. The rupee volatility, concerns over carry trade, and vulnerability of the INR have been key factors in dissuading FPIs from Indian markets as it impacts dollar returns.
6. The US sanctions and the delays in signing the Indo-US trade deal has been a dampener as most FPIs are not comfortable about India buying Russian oil, amidst stringent Western sanctions. Most FPIs are anticipating repercussions here.

It is not just valuations, but also the fact that most FPIs were heavily overweight on India and that needed realignment. Also, FPIs have been concerned about India’s diplomatic stand. Geopolitical risk and a volatile rupee have also not helped matters much.