New Delhi, August 17 (HS): Foreign Portfolio Investors (FPIs) accelerated their withdrawal from Indian equities in August, pulling out close to ₹21,000 crore ($2.5 billion) within the first ten trading sessions, as mounting global headwinds and domestic earnings disappointments dampen appetite for risk.

Data from Indian depositories show cumulative net outflows of ₹30,924 crore ($3.7 billion) between August 1 and 15, taking total withdrawals so far in 2025 to more than ₹1.1 trillion ($13.3 billion). The latest exodus follows July’s net sell-off of ₹17,741 crore, marking the second consecutive month of foreign retreat after a period of inflows in the March–June quarter.

Market analysts highlight a combination of factors behind the reversal, including weak quarterly corporate earnings, persistent rupee depreciation, and escalating trade frictions with the United States. Washington recently imposed a 25% tariff on Indian exports and has threatened additional penalties linked to New Delhi’s continued crude oil imports from Russia. The prospect of further sanctions has compounded investor unease.

“Geopolitical uncertainty and tariff-related risks are weighing heavily on sentiment. The volatility around U.S. trade policy, coupled with fragile earnings growth in India, has prompted global investors to cut exposure and opt for defensive positioning,” said Prashant Dhami, Vice President at Dhami Securities.

Despite bouts of heavy foreign selling, domestic institutional investors have attempted to plug the gap, but analysts warn that cross-border flows could remain volatile in the months ahead. The interplay of shifting interest rate outlooks in the U.S. and Europe, unresolved trade disputes, and global growth concerns are expected to dictate investor behavior across emerging markets.

For India, the FPI pullback underscores an ongoing challenge: sustaining equity market momentum against a backdrop of brittle global capital flows, volatile currency movements, and external shocks.

Hindusthan Samachar / Jun Sarkar