Foreign Investors Withdraw ₹24,753 Crore from Indian Equity Markets in Early March

Foreign investors have continued their retreat from the Indian equity markets, pulling out ₹24,753 crore (approximately USD 2.8 billion) in the first week of March.

This marks the 13th consecutive week of net outflows, reflecting growing concerns over escalating global trade tensions and underwhelming corporate earnings.

Sustained Outflows in 2025

The latest outflow follows a trend of significant withdrawals in the first two months of 2025. In February, FPIs pulled out ₹34,574 crore from Indian equities, while January witnessed a massive outflow of ₹78,027 crore.

Cumulatively, foreign investors have withdrawn ₹1.37 lakh crore from Indian equities so far this year, according to data from depositories.

Since December 13, 2024, FPIs have offloaded equity shares worth USD 17.1 billion, underscoring a prolonged period of risk aversion.

This contrasts sharply with the optimism seen in 2023 when India attracted net inflows of ₹1.71 lakh crore, driven by strong economic fundamentals.

Debt Market Activity

While equities have faced significant outflows, the debt market has seen mixed activity. FPIs invested ₹2,405 crore in the debt general limit during the same period.

However, they withdrew ₹377 crore from the debt voluntary retention route (VRR), indicating a selective approach to fixed-income investments.

Shift Towards Domestic Consumption Sectors

Amid the ongoing uncertainty, foreign investors are increasingly reallocating their investments towards domestic consumption-driven sectors such as financials, telecom, hotels, and aviation.

These sectors are perceived as relatively insulated from global trade tensions and external economic shocks. Conversely, externally linked sectors are witnessing reduced interest as investors adopt a more defensive approach.

Sharp Contrast to Previous Years

The current trend of outflows marks a stark departure from the previous year. In 2024, FPIs scaled back their investments significantly, with net inflows amounting to just ₹427 crore.

This was a dramatic decline compared to the robust inflows of ₹1.71 lakh crore in 2023 when India was seen as a bright spot in the global economy. The year 2022, on the other hand, saw net outflows of ₹1.21 lakh crore, primarily due to aggressive rate hikes by global central banks.

Growing Uncertainty and Investor Caution

The persistent outflows reflect the growing uncertainty in global markets, fueled by geopolitical tensions, trade disputes, and concerns over slowing economic growth.

Foreign investors are adopting a cautious approach, prioritising stability over riskier assets. This has led to a recalibration of their portfolios, with a focus on sectors that are less vulnerable to external shocks.

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