Foreigner Portfolio investors (FPI) have withdrawn Rs 24,753 crore ($ 2.8 billion) from Indian stock markets in the first week of March. FPIs continue to be pure selling amids the weak income of companies and increasing trade tension globally. Earlier in February, foreign investors withdrawn Rs 34,574 crore from the Indian stock market and Rs 78,027 crore in January. Depository data shows that in 2025, FPIs have withdrawn a total of Rs 1.37 lakh crore. According to the data, FPI has sold shares worth Rs 24,753 crore till March 7 this month. This is the 13th consecutive week of their net withdrawal.
FPI going back to this reason
Continuous selling by foreign investors is mainly due to a combination of global and domestic factors. Research Himanshu Srivastava, Associate Director-Manager of Morningstar Investments, said that the announcement of high tariffs on countries such as Mexico, Canada and China and the announcement of counter-tariffs on several countries including India has affected market perception. He said that the weak results of companies on the domestic front have further increased the negative perception. With this, FPIs are taking precautions about Indian shares. He said that this uncertainty has increased from a weak rupee, which has reduced the attraction of Indian securities.
Investors are turning to China
Vaibhav Porwal, a co-founder of Dazerv, said the fall in the rupee has reduced the return for FPI. At the same time, India’s tax structure is also one of the reasons, which has 12.5 percent of the trokes on long term capital gains and 20 percent tax on short term. This is contrary to alternative markets, which provide low or zero tax environment. VK Vijaykumar, the main investment strategist of Jiojit Financial Services, mentioned the growing attraction towards China’s shares. He said that FPIs are turning there with attractive valuation and recent positive initiatives for large companies of the Chinese government. This has contributed to a significant boom in Chinese stocks.
Chinese market is giving great returns
The Hang Seng index has given a return of 23.48 per cent as compared to India’s Nifty’s -5 per cent returns on an annual basis. However, he warned that it could be a short -term cycle trade, as the performance of China’s corporate sector has been less than expected since 2008. According to the data, during the period under review, FPI invested Rs 2,405 crore under the general limit in bonds and withdraws Rs 377 crore from voluntary retention route. The FPI’s investment in the Indian market in 2024 was quite reduced to Rs 427 crore. Earlier in 2023, he had invested Rs 1.71 lakh crore in the Indian market. Whereas in 2022, the global central banks withded with an aggressive increase in interest rates by Rs 1.21 lakh crore.
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