FPIs pull ₹21,000cr from Indian equities in first-half of August
What's the story
Foreign Portfolio Investors (FPIs) have offloaded Indian equities worth nearly ₹21,000 crore in the first half of August. The trend is attributed to US-India trade tensions, lackluster corporate earnings for Q1, and a weakening rupee. With this, FPIs' total equity outflow for 2025 has hit ₹1.16 lakh crore. The FPI activity will be influenced by the action on the tariff front ahead.
Market outlook
US secondary tariff on India might not be implemented
The easing of US-Russia tensions and absence of new sanctions suggest that the proposed 25% secondary tariff on India might not be implemented after August 27. This is a positive development for the market, said Vaqarjaved Khan, CFA - Senior Fundamental Analyst at Angel One. He also noted S&P's upgrade of India's credit rating from BBB- to BBB could further boost FPIs' sentiment.
Withdrawal details
FPIs withdrew ₹29,975 crore from equities till August 14
According to depository data, FPIs withdrew a net sum of ₹29,975 crore from equities till August 14. This came after a net withdrawal of ₹17,741 crore in July. Prior to that, FPIs had invested ₹38,673 crore over three months from March to June. "The sustained outflows are being driven primarily by a confluence of global uncertainties," said Himanshu Srivastava from Morningstar Investment Research India.
Market challenges
Geopolitical tensions and interest rate uncertainties driving outflows
Srivastava added that heightened geopolitical tensions and uncertainty over interest rates in developed economies, especially the US, have created a risk-averse sentiment. The recent strengthening of the US dollar has also made emerging market assets like India less attractive. VK Vijayakumar from Geojit Investments said tepid earnings growth and high valuations have also contributed to this outflow trend.
Sector analysis
IT index has seen sustained selling, debt investments remain low
The sustained selling in IT stocks has dragged the IT index down. However, banking and financials have remained relatively resilient due to fair valuations and institutional buying. Despite these challenges, FPIs have invested ₹4,469 crore in the debt general limit and ₹232 crore in the debt voluntary retention route during this period under review.