Foreign investors continue to pull back money from the Indian equity market, withdrawing Rs 24,753 crore (about USD 2.8 billion) in the first week of March amid escalating global trade tensions and lacklustre corporate earnings.
This came following an outflow of Rs 34,574 crore from equities in February and Rs 78,027 crore in January.
The total outflow by FPIs has reached Rs 1.37 lakh crore in 2025 so far, data with the depositories showed.
According to the data with the depositories, Foreign Portfolio Investors (FPIs) offloaded shares worth Rs 24,753 crore from Indian equities this month (till March 7).
This also marks the 13th consecutive week of net outflows. Since December 13, 2024, FPIs have offloaded equity shares to the tune of USD 17.1 billion.
The sustained selling by overseas investors is chiefly due to a combination of global and domestic factors.
A major catalyst continues to be the escalation in global trade tensions, which significantly weigh on investor sentiment. Imposition of higher tariffs by the US on countries like Mexico, Canada and China, along with reciprocal tariffs on several countries, including India, has dented market sentiments, Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment, said.
On the domestic front, lacklustre corporate earnings added to the negative sentiment as it failed to meet investor expectations, thereby reinforcing FPIs to exercise caution toward Indian equities, he added.
This uncertainty has been compounded by a weaker rupee, which has also diminished the appeal of Indian assets.
Vaibhav Porwal, co-founder of Dezerv, pointed out that the depreciation of the rupee has eroded returns for FPIs, while India’s tax structure, with 12.5 per cent tax on long-term capital gains and 20 per cent on short-term gains, contrasts with alternative markets offering lower or zero tax environments.
Moreover, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted the growing interest in Chinese stocks, driven by attractive valuations and the Chinese government’s recent positive initiatives for large businesses.
This has contributed to a remarkable rally in Chinese stocks, with the Hang Seng Index posting a year-to-date return of 23.48 per cent, compared to a negative 5 per cent return for India’s Nifty.
However, he cautioned that this could be a short-term cyclical trade,
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