Foreign Investors Pull Out ₹10,355 Crore from Indian Equity Markets Amid US Tariff Concerns

Significant Withdrawal from Indian Markets

New Delhi: In a notable shift, foreign investors have withdrawn ₹10,355 crore from India's equity markets over the past four trading sessions, primarily due to the extensive tariffs recently imposed by the United States on various countries, including India.

This outflow follows a net investment of ₹30,927 crore during the six trading sessions from March 21 to March 28, which had previously helped to mitigate the overall outflow for March to ₹3,973 crore, as per data from the depositories.

In February, foreign portfolio investors (FPIs) withdrew ₹34,574 crore, while January saw an even larger outflow of ₹78,027 crore.

This change in investor behavior underscores the volatility and shifting dynamics within global financial markets.

Looking ahead, market analysts will be keenly observing the long-term effects of the newly proposed tariffs, alongside forthcoming announcements from the Reserve Bank of India (RBI) regarding its monetary policy, particularly amid speculation of a possible rate cut, noted Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services at BDO India.

These factors are expected to significantly influence investment strategies in the upcoming cycle.

According to the latest figures, FPIs have withdrawn ₹10,355 crore from Indian equities between April 1 and April 4.

This brings the total outflow by FPIs to ₹1.27 lakh crore for the year 2025.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, remarked that the tariffs, which were more severe than expected, have raised concerns regarding their broader economic implications.

He elaborated that the 10% baseline tariff on all imports, coupled with a 25% tariff on automobile imports and steep reciprocal tariffs on most nations (26% on India), could potentially lead to increased inflation in the US. There are also rising fears that these actions might drive the US economy towards stagflation.

This uncertainty has resulted in significant sell-offs in US markets, with the S&P 500 and Nasdaq indices dropping over 10% within just two days.

The risk of a full-scale trade war could have extensive repercussions, impacting global trade and economic growth. However, the substantial decline in the dollar index to 102 is viewed as a positive sign for capital inflows into emerging markets like India, Vijayakumar added.

In addition to equities, FPIs also withdrew ₹556 crore from the debt general limit and ₹4,038 crore from the debt voluntary retention route.