The shift in investor sentiment highlighted the volatility and evolving dynamics in global financial markets. File
| Photo Credit: The Hindu
Foreign investors withdrew ₹10,355 crore from the equity markets in the last four trading sessions this month owing to sweeping tariffs imposed by the U.S. on most nations, including India.
“The outflow occurred after a net investment of ₹30,927 crore in the six trading sessions from March 21 to March 28. This infusion helped reduce the overall outflow for March to ₹3,973 crore,” according to data from the depositories.
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In February, Foreign Portfolio Investors (FPIs) pulled out ₹34,574 crore, while the outflow was higher at ₹78,027 crore in January. This shift in investor sentiment highlighted the volatility and evolving dynamics in global financial markets.
Going forward, market participants will closely track the long-term impact of the proposed tariffs, along with upcoming announcements from the Reserve Bank of India (RBI) regarding its monetary policy stance amid expectations of a potential rate cut, said Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services, BDO India.
“These developments will play a crucial role in shaping investment strategies for the upcoming cycle,” he added. According to the data, FPIs have pulled out ₹10,355 crore from Indian equities in the last four trading sessions (from April 1 to April 4, 2025). With this, the total outflow by FPIs has reached ₹1.27 lakh crore so far in 2025.
“The tariffs, which were much steeper than anticipated, raised concerns about their broader economic impact,” V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, said.
He explained that the 10% baseline tariff on all imports, along with a 25% tariff on automobile imports and steep reciprocal tariffs on most countries (26% on India) could lead to higher inflation in the U.S. There are also growing concerns that these measures might push the U.S. economy towards stagflation.
This uncertainty triggered massive selling in the U.S. markets, with the S&P 500 and Nasdaq losing more than 10% in just two days. “The potential for a full-blown trade war could have far-reaching consequences, affecting global trade and economic growth. However, the steep decline in the dollar index to 102 is seen as favourable for capital flows into emerging economies like India,” Mr. Vijayakumar said.
Apart from equities, FPIs took out ₹556 crore from the debt general limit and withdrew ₹4,038 crore from the debt voluntary retention route.
Published – April 06, 2025 12:06 pm IST
