FPIs Pull ₹18,000 Crore from Equities in August Amid Trade and Currency Pressures
Sharp foreign outflows continue in 2025
Foreign Portfolio Investors (FPIs) have withdrawn ₹17,924 crore from Indian equities so far in August, driven by US–India trade tensions, disappointing Q1 earnings, and a weakening rupee.
This brings the total equity outflow in 2025 to ₹1.13 trillion, according to depository data. The pullback follows a net withdrawal of ₹17,741 crore in July, after three months of net inflows between March and June totaling ₹38,673 crore.
Key drivers of the sell-off
- Trade tensions: The US imposed a 25% tariff on Indian goods from August 1, followed by an additional 25% hike last week, prompting market and FPI anxiety.
- Earnings disappointment: Several first-quarter results fell short of expectations, denting sentiment in large-cap and export-oriented sectors.
- Currency weakness: Depreciation in the Indian rupee made domestic assets less attractive to global investors.
- Global yield shifts: Rising US Treasury yields redirected foreign capital towards safer fixed-income instruments.
Sector impact and market reaction
The sell-off has been broad-based, with heavy FPI selling in IT, financials, and metals, sectors most sensitive to trade and currency movements. The Sensex and Nifty have seen six consecutive weeks of decline, reflecting both global and domestic pressures.
Offsetting flows in debt markets
Despite the equity exodus, FPIs invested ₹3,432 crore in the debt general limit and ₹58 crore in the voluntary retention route during the review period, indicating selective interest in Indian fixed-income assets.
Outlook: Fragile sentiment ahead
Analysts expect risk-off sentiment to persist in the near term.
- Vaqarjaved Khan, CFA, of Angel One, warns that tariff talks and trade negotiations will remain key drivers this week.
- Himanshu Srivastava of Morningstar notes that global uncertainty and currency pressures could keep foreign flows volatile.
Until there is clarity on the US–India trade front and stability in the rupee, FPI participation in Indian equities is likely to stay muted.
