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Foreign investors have heavily pulled out from Indian equities in the first week of April, reacting to U.S. President Donald Trump’s reciprocal tariffs. According to data from the National Securities Depository Ltd (NSDL), foreign portfolio investors (FPI) sold equities worth Rs 10,355 crore between April 2 and April 4. The outflows come amid increased global uncertainty and a sharp risk-off sentiment in financial markets.
Improved Inflows in March
While the first week of April saw significant FPI outflows, March had a slightly more positive trend. The pace of FPI selling slowed down in March, thanks to a pickup in foreign inflows during the last week of the month. This helped bring down net outflows to Rs 3,973 crore, a considerable improvement compared to the net selling of Rs 34,574 crore in February.
Trump’s Tariff Announcement Triggers Global Turmoil
The turbulence in global markets intensified in April after President Trump announced reciprocal tariffs on several countries, which raised concerns about a potential trade war. This move sparked massive sell-offs in global markets. US stock markets alone lost around USD 5.4 trillion in market capitalization within just two days of the tariff announcement.
The uncertainty surrounding the tariffs also impacted the US debt and IPO markets. No corporate debt issues took place in the US over the past two days, and planned IPOs have been postponed. Investors, faced with market turmoil, have adopted a “wait and watch” approach, choosing to hold back fresh capital.
Market Expert’s Take on FPI Selling
Market expert Ajay Bagga shared his insights on the situation, stating that sharp foreign inflows into Indian markets are unlikely in the near term. “We don’t expect sharp inflows for now into the Indian markets till there is some semblance of order created out of the disorder unleashed by Trump Tariffs. Sentiment recovery could be a process that works out over a few months, or it could turn fast if major trade negotiations are concluded quickly,” Bagga said.
He emphasized that the recent FPI selling in India is largely a liquidity-driven move, with global emerging market and India-specific funds redeeming their holdings to meet liquidity pressures. “There is no negative on India, as the USD 80 billion of Indian exports to the US are too small a number in comparison to the scale of the USD 4.2 trillion Indian economy,” he added.
India Remains Fundamentally Strong
Despite the current volatility, experts remain optimistic about India’s long-term prospects. They believe that India remains fundamentally strong. However, they acknowledge that global uncertainties will continue to influence capital flows in the short term, with the pace of market recovery dependent on how quickly trade negotiations progress.
(With Input From ANI)
Also Read: SBI Urges India To Expand PLI Scheme In Response To Global Tariff Changes
