In most years; FPIs do not like to sell very heavily in emerging markets in the month of December, as it distorts their performance. However, these are hardly normal times; amidst US tariffs, India buying Russian oil, and concerns over India’s relative valuations. The month of December 2025 has begun on an ominous note, with FPIs net sellers to the tune of $(1.96) billion in the first fortnight of the month. It remains to be seen, how FPIs trade in the second fortnight. The first half of December has been clearly dominated by FPI selling, as is evident below. Here is a sectoral view of December first half FPI flows. 

Broadly, equity AUC (assets under custody) of FPIs at $814.25 billion and the overall AUC at $893.89 billion are, now, well below September 2024 peaks. Here are key takeaways. 

1. The inordinate delay in inking the Indo-US trade deal has led to panic selling by FPIs. Trade data indicates that US tariffs are really hitting Indian exports where it hurts.
2. FPIs have India-specific concerns over slowing nominal growth, fiscal deficit spilling over, high government debt, and a relative slackening of the reforms process. 
3. However, the one factor that really spooked the FPI sentiments was the free fall in the Indian rupee, which even briefly crossed ₹91/$, with limited RBI intervention 

Based on the FPI flow data published by NSDL for the first fortnight of December 2025, net FPI selling of $(1,962) million also displays some critical sectoral trends. 

1. Oil & Gas got positive flows in the first fortnight at $331 million. This is attributed to buying in Reliance Industries as well as demand for OMCs amidst low crude prices.
2. Metals & Mining also witnessed inflows in the first fortnight of December on hopes of a sharp revival in Chinese growth, which will be positive for metal prices.
3. Consumer durables and autos are still showing FPI bets on the domestic demand story, but the FPI enthusiasm in that narrative appears to be waning.
4. FPIs sold off heavily in BFSI. It is still a domestic theme, but considering its weight in the India basket, BFSI selling is more likely to be driven by broad sentiments.
5. Selling in IT and Healthcare continued, with most FPIs preferring to stay away from sectors depending on US business flows due to a volatile policy environment.
6. The interesting selling momentum was seen in sectors like Power, Capital Goods, Cement, Realty, and Telecom; cases of the capex cycle slowing down. 

For FPIs, it is no longer about domestic versus global stories. It is more about defending their gains in volatile narratives amidst a rupee which is falling freely!