India FPI Capital Outflow
Analysis based on 6 articles · First reported Mar 02, 2025 · Last updated Mar 16, 2025
The significant capital outflows from India's equity market, driven by Foreign Portfolio Investors, have led to a decline in the S&P BSE Sensex and a cautious approach by foreign investors. This trend is influenced by global trade tensions, elevated US bond yields, and the depreciation of the India — Indian rupee, making American and Chinese assets more attractive.
Foreign Portfolio Investors (FPIs) have withdrawn a substantial Rs 1.42 lakh crore ($16.5 billion) from India's equity market in 2025, including over Rs 30,000 crore in the first half of March. This marks the 14th consecutive week of net outflows. Key drivers include global trade tensions stemming from Donald Trump's US trade policies, which have raised fears of a tariff-induced recession and reduced global risk appetite. Additionally, elevated US bond yields and a strong United States have made American assets more appealing, while the depreciation of the India — Indian rupee has eroded returns for foreign investors. Many FPIs have redirected their investments to China's stock market, which has shown stronger performance. The outflows have negatively impacted the S&P BSE Sensex, which has fallen over 6 percent year-to-date. Experts from Morningstar DBRS and Geojit Financial Services have highlighted these factors, noting a cautious stance by foreign investors towards India's equities.
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