Foreign Investors Continue to Withdraw from Indian Markets Amid Global Uncertainty
As FPIs continue to sell, outflows likely to rise before inflows revive
The Economic TimesImage: The Economic Times
In the first half of April, foreign investors sold shares worth ₹49,481 crore ($6 billion USD), primarily in the financial services sector, which faced the heaviest outflows. The selling pressure has eased slightly, but analysts predict further outflows may occur before any revival in foreign investment due to ongoing global tensions.
- 01Foreign investors sold shares worth ₹49,481 crore in early April.
- 02The financial services sector accounted for nearly 40% of these outflows.
- 03March saw the highest selling since 2012, with over ₹60,000 crore offloaded.
- 04Global investors are cautious due to high Indian market valuations.
- 05Domestic inflows have remained strong despite limited returns.
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In the first half of April, overseas investors offloaded shares worth ₹49,481 crore ($6 billion USD), continuing a trend of significant outflows from the Indian market. The financial services sector was particularly hard hit, with outflows of ₹19,152 crore ($2.3 billion USD), representing nearly 40% of total sales. This follows a record selling spree in March, where investors withdrew over ₹60,000 crore ($7.2 billion USD) from the sector, the highest since 2012. Analysts attribute the ongoing selling pressure to global uncertainties, particularly the US-Iran conflict, which has heightened investor caution. Although selling has eased in the latter half of April, experts like U R Bhat and Pankaj Pandey warn that outflows could accelerate before foreign inflows revive, as investors remain wary of high valuations in the Indian market. Despite the outflows, domestic investment has provided some stability, with inflows of ₹1,340 crore ($160 million USD) noted in sectors like power and utilities. However, this is the lowest fortnightly inflow since January 2025, indicating a cautious approach from global investors.
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The continued outflows may lead to increased volatility in the stock market, affecting investor sentiment and potentially leading to higher borrowing costs for businesses.
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