Foreign Investors Withdraw ₹10,355 Crore from Indian Markets
In a significant shift, foreign investors have pulled out ₹10,355 crore from India’s equity markets over the past four trading sessions. This withdrawal follows the United States’ recent imposition of extensive tariffs on imports from various nations, including India. The outflow comes on the heels of a net investment of ₹30,927 crore during the previous six sessions, which had temporarily reduced March’s overall outflow to ₹3,973 crore.
Impact of U.S. Tariffs on Global Markets
The recent wave of foreign portfolio investor (FPI) withdrawals highlights the growing uncertainty in global trade dynamics, particularly due to the U.S. government’s decision to impose a 10% baseline tariff on all imports and a steep 25% tariff on automobile imports. Additionally, reciprocal tariffs of 26% have been levied on countries like India. These measures have raised alarms about potential inflationary pressures in the U.S. and the risk of stagflation—a combination of stagnation and inflation.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that the broader economic implications of these tariffs could be severe. The U.S. stock markets have already reacted negatively, with the S&P 500 and Nasdaq experiencing losses exceeding 10% within just two days. Vijayakumar warned that the potential for a full-blown trade war could have far-reaching consequences for global trade and economic growth.
FPI Withdrawals and Market Reactions
In addition to the equity market outflows, FPIs also withdrew ₹556 crore from the debt general limit and ₹4,038 crore from the debt voluntary retention route during this period. As of April 4, the total outflow from Indian markets in 2025 has reached ₹1.27 lakh crore, reflecting heightened global uncertainties and investor caution.
Market participants are now closely monitoring the long-term effects of the proposed tariffs, as well as upcoming announcements from the Reserve Bank of India (RBI) regarding its monetary policy stance. Expectations of a potential rate cut could influence investment strategies in the coming months, according to Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services at BDO India.
Future Outlook for Indian Markets
The recent decline in the dollar index to 102 may provide a silver lining for capital flows into emerging markets like India. Investors are keenly observing how the U.S. tariffs will shape global economic conditions and whether the RBI’s monetary policy adjustments will stabilize the Indian market.
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