FPIs withdraw Rs 12,257 cr in first week of Sep on strong dollar, US tariff concerns

New Delhi: Foreign investors pulled out Rs 12,257 crore (USD 1.4 billion) from Indian equities in the first week of September, weighed down by a stronger dollar, US tariff concerns, and persistent geopolitical tensions.

This came following a net outflow of Rs 34,990 crore in August and Rs 17,700 crore in July.

With this, the total outflow by Foreign Portfolio Investors (FPIs) in equities reached Rs 1.43 lakh crore so far in 2025, data with the depositories showed.

In the coming week, FPI flows are expected to be driven by US Fed commentary, US labour market data, RBI rate cut expectations and its stance on rupee stability, Vaqarjaved Khan, Senior Fundamental Analyst, Angel One, said.

"While near-term volatility may persist, India's structural growth story, policy reforms, such as GST rationalisation, and expectations of an earnings revival could bring FPIs back once global uncertainties ease," Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment, said.

Market experts believe that a combination of global and domestic factors triggered the latest withdrawals.

"Multiple factors contributed to this risk-off sentiment -- a stronger dollar, renewed US tariff threats, and continuing geopolitical tensions added to global uncertainty," Srivastava said.

Domestically, slowing corporate earnings momentum and concerns over high valuations -- Indian equities continue to trade at a premium to other emerging markets -- prompted FPIs to book profits and reduce exposure, he added.

Echoing similar views, Khan said US tariff tensions, a weak rupee and global risk-off sentiment led to the selloff. The sentiment was cushioned by the rationalisation of GST rates by the government and healthy first quarter GDP data of 7.8 per cent.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said that sustained massive DII buying is enabling FPIs to encash at high valuations and take the money to cheaper markets, such as China, Hong Kong, and South Korea.

On the other hand, FPIs invested Rs 1,978 crore in the debt general limit and withdrew Rs 993 crore in the debt voluntary retention route during the period under review.