Daijiworld Media Network – New Delhi
New Delhi, Feb 23: Foreign Portfolio Investors (FPIs) have withdrawn over Rs 23,710 crore from Indian equity markets this month alone, pushing total outflows past Rs 1 lakh crore in 2025. This mass exodus of funds is largely attributed to rising global trade tensions and concerns over economic stability.
According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, foreign investments in India are likely to revive in the next two to three months, once economic growth and corporate earnings show signs of recovery.
As per depository data, FPIs offloaded Rs 23,710 crore from Indian equities in February (till the 21st), following a staggering Rs 78,027 crore net outflow in January. These consecutive withdrawals have now totaled Rs 1,01,737 crore in 2025, marking a significant downturn in investor sentiment.
The relentless selling pressure has weighed heavily on the Indian stock market, with the Nifty index declining 4% year-to-date. Market confidence was further shaken after reports emerged that US President Donald Trump was considering new tariffs on steel and aluminum imports, along with reciprocal tariffs on multiple countries. This has stoked fears of a potential global trade war, causing FPIs to reassess their exposure to emerging markets, including India, said Himanshu Srivastava, Associate Director at Morningstar Investment Research India.
Apart from global uncertainties, weak corporate earnings and persistent depreciation of the Indian rupee—which recently hit multi-year lows—have further diminished the appeal of Indian assets, according to Srivastava.
Following Trump’s election victory, the US market has witnessed strong capital inflows. However, China has recently emerged as a major destination for global investments. Vijayakumar pointed out that Chinese stocks remain relatively cheap, fueling a trend of "Sell India, Buy China." However, he noted that such shifts have occurred in the past and are unlikely to last due to China’s structural economic challenges.
FPIs have also pulled money from India's debt markets, withdrawing Rs 7,352 crore from the general debt limit and Rs 3,822 crore from the debt voluntary retention route.
Foreign investor sentiment in 2025 is starkly different from the previous two years. In 2024, net FPI inflows were a mere Rs 427 crore, a drastic reduction compared to Rs 1.71 lakh crore in 2023, when optimism over India’s economic fundamentals was at its peak. In contrast, 2022 saw a net outflow of Rs 1.21 lakh crore, primarily due to aggressive rate hikes by global central banks.
While short-term uncertainties persist, experts believe FPI inflows may stabilize once global economic conditions and domestic corporate performance improve. Investors will be watching key indicators in the coming months to gauge whether India can once again emerge as an attractive destination for foreign capital.