Foreign portfolio investors pull the ripcord, trade winds to blame

Rising indices push foreign investors into a controlled landing

Foreign portfolio investors (FPIs) continue to offload Indian equities despite optimism around the US Federal Reserve’s rate cuts and this month’s goods and services tax (GST) rationalisation. 

So far in September, FPIs have sold equities worth ₹10,782 crore, according to National Securities Depository data. The selling picked up after the National Stock Exchange Nifty and BSE Sensex touched record highs at the end of September 2024. Between October 2024 and March 2025, FPIs pulled out ₹2.2 trillion from Indian markets. 

Weak corporate results in the July–September and October–December quarters undermined valuations that had risen sharply during the post-pandemic rally. 

Donald Trump’s victory in the US presidential elections, combined with uncertainty over US trade policy, further weighed on foreign capital inflows. A 90-day tariff pause announced by President Trump in April, however, brightened India’s outlook for foreign investors. 

From April through June 2025, FPIs were net buyers. But renewed trade tensions, culminating in a 50 per cent tariff on India, rattled foreign investors once again. 

Looking ahead, FPI flows will depend on whether the GST cuts improve corporate profits in the second half of 2025–26 and on progress towards a trade deal with the US.