Indian stock market: Foreign portfolio investors (FPIs) are relentlessly selling in the Indian stock market. In 2025, FPIs remained net sellers in the Indian stock market by selling out Indian shares worth around ₹2,27,500 crore in the cash segment. However, they are betting high in the primary market. According to the NSDL data, collective investment of offshore funds in the Indian anchor books of the initial public offerings (IPOs) surged threefold in FY25 to around ₹26,500 crore, threefold against the previous financial year.
According to stock market experts, this dual behaviour of FPIs can be attributed to various reasons, but a major factor among them is the overpriced Indian secondary market in comparison to the Indian primary market. They said that FPIs are not in the mood to accept market-driven stocks as they want a prioritised deal where they can influence terms, timing, and structure rather than accept market-determined pricing in secondary transactions.
Overpriced Indian stock market
Pointing towards the overpriced Indian stock market against IPOs, Anuj Gupta, Director at Ya Wealth, said, “The Indian stock market looks overpriced compared to other emerging markets. The MSCI India index trades at a P/E multiple of 25.4, compared to the MSCI Emerging Market Index, which includes India, with a P/E multiple of 15.41. The MSCI China index trades at a P/E multiple 14.6, while the MSCI Korea index is 12.4x.”
“Even the 50% Trump tariffs on Indian exports have not led to any significant correction in the market, preventing investors from entering cheaply. In such a scenario, IPOs offer a better play for the Indian markets as managements and bankers price the issue attractively, drawing significant investor interest,” Anuj Gupta added.
On what is fueling FPIs’ confidence in the Indian primary market ahead of the direct equities, Avinash Gorakshkar, a SEBI-registered fundamental analyst, said, “The steady demand from domestic institutional investors has deepened equity markets and improved liquidity, giving FIIs the confidence to participate in IPOs without worrying about getting trapped.”
IPO offering prioritised deal?
“By investing in IPOs instead of stocks, FPIs prioritise deals that can influence terms, timing, and structure rather than accepting market-determined pricing in secondary transactions. The preference for anchor positions in IPOs provides investors with allocation certainty, favourable pricing, and lock-up periods that align with their portfolio management strategies,” said Avinash Gorakshkar, adding, “FPIs’ selling in the secondary market can be expected when the primary market fizzles out and the flow of IPOs dries.”
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
