FPIs Continue To Withdraw From Indian Equities In March, See What Triggered The Outflow

Between March 1 and March 13, FPIs offloaded Rs 30,015 crore worth of Indian equities, continuing a 14-week streak of net outflows, depository data revealed.

The depreciation of the Indian rupee further exacerbated the situation by diminishing returns for foreign investors.

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The Indian equity market witnessed a significant pullback by foreign investors, who withdrew more than Rs 30,000 crore in the first half of March due to rising global trade tensions.

This capital flight followed previous outflows of Rs 34,574 crore in February and Rs 78,027 crore in January. As per official depository data, the total foreign portfolio investor (FPI) outflows in 2025 reached Rs 1.42 lakh crore ($16.5 billion), reported PTI.

Between March 1 and March 13, FPIs offloaded Rs 30,015 crore worth of Indian equities, continuing a 14-week streak of net outflows. A mix of international and domestic factors fueled this prolonged selling. Himanshu Srivastava, Associate Director - Manager Research at Morningstar Investment, attributed this trend to growing uncertainty over US trade policies under President Donald Trump, which raised fears of a tariff-induced recession. This shift in market sentiment discouraged risk-taking in emerging markets like India.

US Assets More Lucrative For Investors

Another crucial reason behind the outflows was the appeal of US assets, driven by higher bond yields and a strong dollar. The depreciation of the Indian rupee further exacerbated the situation by diminishing returns for foreign investors.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted that many foreign funds exiting Indian markets were redirected towards Chinese stocks, which performed better in 2025 compared to other global markets. Although the recent dip in the dollar index slowed fund flows to the US, Vijayakumar noted that the ongoing global trade conflict could push investors toward safer assets like gold and the dollar.

FPIs Continue To Invest In Debt Market

On the other hand, FPIs infused Rs 7,355 crore into the debt general limit while pulling out Rs 325 crore from the debt voluntary retention route. The broader trend indicates that foreign investors have taken a cautious stance, significantly reducing their exposure to Indian equities. This cautious approach was evident in 2024 as well, when net inflows barely reached Rs 427 crore— a stark contrast to the Rs 1.71 lakh crore recorded in 2023, which was fueled by optimism over India's economic resilience. In contrast, 2022 saw a net outflow of Rs 1.21 lakh crore as central banks worldwide aggressively raised interest rates.