New Delhi, August 31 (H.S.): August proved to be a tough month for domestic equity markets as Foreign Portfolio Investors (FPIs) executed massive sell-offs, withdrawing ₹34,993 crore (approximately $4 billion) from Indian stocks. This marks the largest monthly outflow by FPIs since February, when they offloaded ₹34,574 crore.

In comparison, FPIs had already sold shares worth ₹17,741 crore in July, making August’s sell-off nearly double that volume. Between January and August 2025, FPIs have cumulatively pulled out ₹1.30 lakh crore from the domestic equity markets.

Prashant Dhami, Vice President of Dhami Securities, pointed to a confluence of global and domestic factors behind the FPI sell-off. At the global level, sentiments were shaken by U.S. President Donald Trump’s imposition of a steep 50% tariff on Indian goods, raising concerns about India’s trade competitiveness and growth outlook.

Domestically, weak quarterly performances by major corporates in the June quarter added pressure on the markets. Dhami also highlighted India’s relatively high stock valuations compared to other global markets, prompting some foreign investors to redeploy capital from India to cheaper markets worldwide.

Despite the secondary market sell-off, FPIs have remained buyers in the primary market, investing ₹40,305 crore so far this year, largely driven by attractive valuations in new IPOs. On the debt market front, August saw a shift, with FPIs investing ₹6,766 crore under the debt general limit while withdrawing ₹872 crore via the debt voluntary retention route.

This mixed trend underscores a cautious but opportunistic stance by foreign investors navigating complex global and domestic dynamics.

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Hindusthan Samachar / Jun Sarkar