
Record foreign outflows cap India stock rally in 2025; selling may ease next year

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Record foreign portfolio investor (FPI) outflows capped India's stock market rally in 2025, with $18 billion sold, the highest annual outflow on record. Despite this, domestic buying supported the Nifty 50 and Sensex, which rose about 10%. Analysts predict a revival in foreign inflows in 2026 due to easing valuations and improving earnings, as foreign ownership of Indian equities hit a 15-year low. IT stocks were most affected by the selloff, driven by geopolitical concerns and U.S. tariffs. Domestic mutual fund holdings reached a record high, indicating a shift in market ownership.

