FPIs withdraw Rs 23,710 cr from equities in February; total outflow at Rs 1 lakh cr in 2025

New Delhi: Foreign investors have pulled out over Rs 23,710 crore from the Indian equity markets so far this month, pushing total outflows past Rs 1 lakh crore in 2025 amid rising global trade tensions.

Going forward, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, believes that revival of FPI investment in India will happen when economic growth and corporate earnings revive. Indications of that are likely to happen in two to three months.

According to the data with the depositories, Foreign Portfolio Investors (FPIs) offloaded shares worth Rs 23,710 crore from Indian equities so far this month (till February 21). This came following a net outflow of Rs 78,027 crore in January. With these, the total outflow by FPIs has reached Rs 1,01,737 crore in 2025 so far, data with the depositories showed.

This massive selling has resulted in the Nifty yielding negative returns of 4 per cent year-to-date.

Market concerns heightened following reports that US President Donald Trump was considering imposing new tariffs on steel and aluminum imports, along with reciprocal tariffs on several countries, Himanshu Srivastava, Associate Director-Manager Research, Morningstar Investment Research India, said.

These developments reignited fears of a potential global trade war, prompting FPIs to re-evaluate their exposure to emerging markets, including India, he added.

On the domestic front, lackluster corporate earnings and persistent depreciation of the Indian rupee, which breached multi-year lows, further diminished the appeal of Indian assets, Srivastava said.

After Trump's victory in US presidential elections, the US market has been attracting huge capital inflows from the rest of the world. But recently, China has emerged as a major destination of portfolio flows, Geojit Financial Services' Vijayakumar said.

The Chinese president's new initiatives with their leading businessmen have kindled hopes of a growth recovery in China.

"Since Chinese stocks continue to be cheap, this 'Sell India, Buy China' trade may continue. But this trade has happened in the past and experience is that it will fizzle out soon since there are structural problems constraining Chinese economic revival," he added.

Additionally, FPIs withdrew money from the debt market. They pulled out Rs 7,352 crore from debt general limit and Rs 3,822 crore from debt voluntary retention route.

The overall trend indicates a cautious approach by foreign investors, who scaled back investments in Indian equities significantly in 2024, with net inflows of just Rs 427 crore.

This contrasts sharply with the extraordinary Rs 1.71 lakh crore net inflows in 2023, driven by optimism over India's strong economic fundamentals. In comparison, 2022 saw a net outflow of Rs 1.21 lakh crore amid aggressive rate hikes by global central banks.