Foreign Portfolio Investors (FPIs) have recently withdrawn a staggering ₹31,575 crore from India’s equity markets in response to the global turmoil sparked by the extensive tariffs levied by the U.S. against multiple countries, including India. This abrupt capital outflow follows a prior positive trend of net investments amounting to ₹30,927 crore during the six trading sessions from March 21 to March 28, which helped alleviate the overall March outflow to ₹3,973 crore, as reported by the depositories.
A Shift in Investor Sentiment
Compared to previous months, the current exodus of funds signifies a significant change. In February, FPIs withdrew ₹34,574 crore, while January saw an even higher outflow of ₹78,027 crore. This noticeable shift in investor sentiment underscores the inherent volatility and ever-evolving nature of the global financial landscape.
From April 1 to April 11 alone, FPIs retrieved ₹31,575 crore from Indian equities, signaling a total withdrawal of ₹1.48 lakh crore in 2025. The ongoing uncertainty in global stock markets, triggered by President Trump’s imposition of retaliatory tariffs, has been a key factor influencing FPI investments in India, according to V.K. Vijayakumar, the chief investment strategist at Geojit Investments.
Expert Insights and Future Projections
Vijayakumar anticipates that a definitive FPI strategy will only emerge once the current turbulent environment stabilizes. Looking ahead, he foresees FPIs potentially transitioning to net buyers in India, given the anticipated slowdown in both the U.S. and China due to the escalating trade tensions. Despite the challenging global backdrop, he remains optimistic about India’s growth prospects, projecting a 6% expansion in FY26 alongside anticipated improvements in earnings growth that could attract renewed FPI interest post-crisis.
Vinit Bolinjkar, the head of research at Ventura, attributes the recent sell-off in Indian equities to macroeconomic and geopolitical risks catalyzed by American tariffs. Nonetheless, he asserts that India’s robust macro fundamentals remain resilient, buoyed by strong domestic demand and ongoing trade realignments that position the country favorably for long-term investment opportunities.
Notably, FPIs have also divested ₹4,077 crore from the debt general limit and withdrawn ₹6,633 crore from the debt voluntary retention route, underscoring the comprehensive nature of the capital flight. As of the published date on April 13, 2025, at 11:39 pm IST, the repercussions of these financial decisions continue to reverberate across India’s economic landscape, shaping the trajectory of future investment trends and market dynamics.
