In what is being termed as the steepest withdrawal since February, foreign investors pulled out a massive ₹34,993 crore (around USD 4 billion) from Indian equity markets in August, driven mostly by US tariffs on Indian goods that came into effect on August 27.
With this, the total outflow by Foreign Portfolio Investors (FPIs) in equities reached ₹1.3 lakh crore mark so far in 2025, data with the depositories showed.
In July, the withdrawal was ₹17,741 crore, just half of the outflow recorded in August.
Market experts believe that withdrawals were triggered by a combination of global and domestic factors, including pricey domestic valuations.
Also Read: FPIs pull out ₹18,000-cr from equities as trade tensions soar
According to V K Vijayakumar, Chief Investment Strategist at Geojit Investments, a simple explanation for this massive selling by the FPIs is the relatively high valuations in India compared to valuations in other markets, which is making FPIs to move money to cheaper markets.
It is important to note that FPIs have been sustained buyers in the primary market for long, and despite massive selling through the exchanges this year, they bought equity for ₹40,305 through the primary market where valuations of the IPOs are fair, he added.
The last sharpest withdrawal was in February, when FPIs dumped Indian equities worth ₹34,574 crore.
Himanshu Srivastava, Associate director - Manager Research, Morningstar Investment, says less-than-expected corporate earnings in the first quarter are also partly to blame, as are the hiked US tariffs by US President Donald Trump.
"The announcement of steep US tariffs of up to 50 per cent on Indian exports dented sentiment significantly, raising concerns over India's trade competitiveness and growth outlook. At the same time, corporate earnings for the June quarter for a few key sectors fell short of expectations, further dampening investor appetite," he added.
FPIs invested ₹6,766 crore in the debt general limit and withdrew ₹872 crore in the debt voluntary retention route during the period under review.
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