Foreign Portfolio Investors (FPIs) withdrew nearly ₹18,000 crore from Indian equities in August 2025, marking another month of heavy selling. This brings the total equity outflow for the year so far to ₹1.13 lakh crore, according to depository data.
Market experts point to three main reasons for the sell-off. First, rising US-India trade tensions have shaken investor confidence. The US recently imposed a 25% tariff on Indian goods, followed by an additional 25% increase during the month, creating uncertainty over future trade relations.
Second, corporate earnings for the first quarter disappointed investors, with many companies reporting weaker-than-expected performance. This reinforced the cautious outlook for India’s economic growth.
Third, the Indian rupee’s depreciation made local assets less attractive to global investors, while higher US Treasury yields encouraged a shift towards safer investments abroad.
Interestingly, despite the equity exodus, FPIs still showed some confidence in India’s debt market, investing ₹3,432 crore in debt instruments and ₹58 crore via the debt voluntary retention route in August.
With global markets on edge and trade negotiations continuing, analysts expect FPI sentiment to remain fragile in the coming months. Any resolution in trade disputes or improvement in earnings could, however, help restore foreign investor interest in Indian equities.
