Foreign Investors Flee Indian Equities Amid Trade Tensions

Foreign investors withdrew nearly Rs 18,000 crore from Indian equities this month due to US-India trade tensions, underwhelming corporate earnings, and a weakening rupee. Total 2025 outflows have hit Rs 1.13 lakh crore. Analysts suggest FPI sentiment remains fragile with tariffs and trade talks being key concerns.

Foreign investors have pulled nearly Rs 18,000 crore from Indian equity markets this month as trade tensions between the US and India intensify, coupled with underwhelming first-quarter earnings and a debilitated rupee.

The cumulative capital flight by Foreign Portfolio Investors (FPIs) now totals Rs 1.13 lakh crore for 2025. Analysts posit that investor sentiment remains tepid, with looming trade talks and tariff issues poised to further unsettle markets.

Data reveals that FPIs divested Rs 17,924 crore from equities this month up to August 8. Himanshu Srivastava from Morningstar noted that escalating trade barriers and rising US Treasury yields are prompting foreign investors to choose less volatile US treasuries over Indian equities.

(With inputs from agencies.)