Indian equities fell short of at least ₹18,000 crore so far this month after foreign investors pulled out funds as trade tensions between India and the US increased.
With this, the total outflow by Foreign Portfolio Investors (FPIs) in equities has reached ₹1.13 lakh crore so far in 2025, according to data from the depositories, leading to a weakening Indian rupee and disappointing first-quarter corporate earnings.
The data revealed a net sum withdrawal of ₹17,924 crore from equities till August 8; while foreign investors had pulled out ₹17,741 crore on a net basis in July.
In the months from March to June, FPIs had invested ₹38,673 crore.
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From August 1, the US’-imposed 25 per cent tariff on Indian imports was to be levied, which was then extended to August 7. In the meanwhile, US President Donald Trump announced additional tariff of 25 per cent, which will be levied from August 27, bringing the total duties on Indian goods to 50 per cent.
These escalated tariffs spooked markets and FPIs, leading to a massive sell-off in Indian equities, noted Vaqarjaved Khan, CFA, Senior Fundamental Analyst at Angel One.
Khan expects the FPI sentiment to remain “fragile and in risk-off mode” going forward, as trade negotiations emerge as key factors to watch out for in the coming week.
Himanshu Srivastava, Associate Director – Manager Research at Morningstar Investment Research India, also blamed the US-India trade tensions for disappointing first-quarter corporate earnings and a weakening Indian rupee.
Along with tariffs, rising US Treasury yields also led to foreign money moving towards treasuries, he added.
On the other hand, FPIs invested ₹3,432 crore in the debt general limit and put in ₹58 crore in the debt voluntary retention route during the period under review.
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