FPI outflow hits six-month high: Rs 34.99 crore offloaded in August; US tariffs, high valuations fuel pull-out

Foreign investors withdrew Rs 34,993 crore (approximately $4 billion) from Indian equity markets in August, representing the most significant divestment in six months. This substantial withdrawal was influenced by US tariffs on Indian exports and high domestic valuations.The outflow was significantly higher than July’s figure of Rs 17,741 crore. Foreign Portfolio Investors’ (FPIs) total equity withdrawals reached Rs 1.3 lakh crore in 2025, according to depositories data, quoted by PTI.Financial analysts attribute these withdrawals to various international and domestic circumstances. The August withdrawal stands as the largest since February, when FPIs removed Indian equities worth Rs 34,574 crore.“The announcement of steep US tariffs of up to 50 per cent on Indian exports dented sentiment significantly, raising concerns over India’s trade competitiveness and growth outlook,” said Himanshu Srivastava, Associate director – Manager Research, Morningstar Investment.“At the same time, corporate earnings for the June quarter for a few key sectors fell short of expectations, further dampening investor appetite,” he added.V K Vijayakumar, Chief Investment Strategist at Geojit Investments, explains that FPIs’ substantial selling stems from India’s comparatively higher valuations versus other markets, prompting investors to redirect funds towards more affordable markets.Despite significant selling through exchanges, FPIs maintained consistent investment in the primary market, purchasing equity worth Rs 40,305 through fairly valued IPOs this year, he noted.Additionally, FPIs invested Rs 6,766 crore in debt general limit whilst withdrawing Rs 872 crore from the debt voluntary retention route during this period.