Foreign portfolio investors (FPIs) have withdrawn ₹10,355 crore from Indian equity markets during the first four trading days of April (April 1–4), reacting to newly imposed U.S. tariffs affecting several countries, including India.
This sharp outflow follows a brief period of optimism when FPIs injected ₹30,927 crore into Indian equities over six sessions between March 21 and 28. That inflow helped reduce the net outflow for March to ₹3,973 crore, as per depository data.
The latest withdrawal adds to a concerning trend: earlier this year, FPIs pulled out ₹34,574 crore in February and a staggering ₹78,027 crore in January. The cumulative equity outflow by FPIs in 2025 now stands at ₹1.27 lakh crore, reflecting ongoing volatility in global investment sentiment.
Experts attribute the reversal in FPI behavior to heightened uncertainty in global markets. Manoj Purohit, Partner & Leader, FS Tax at BDO India, emphasized that investor focus has now shifted to the long-term impact of the U.S. tariffs and upcoming monetary policy announcements from the Reserve Bank of India. Market participants are increasingly expecting a possible rate cut.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, explained that the unexpectedly steep U.S. tariffs—10% on all imports, 25% on automobiles, and 26% reciprocal duties on Indian goods—have fueled fears of inflation and potential stagflation in the U.S. economy. These concerns triggered a steep sell-off in U.S. markets, with the S&P 500 and Nasdaq plummeting more than 10% over two days.
Despite the growing risk of a global trade war, the decline in the U.S. dollar index to 102 is being seen as a silver lining, potentially improving capital flows to emerging markets like India.
In addition to equity markets, FPIs also pulled ₹556 crore from the general debt category and ₹4,038 crore from the voluntary retention route.
