Foreign investors have pulled out ₹7,945 crore from Indian equities so far in September, weighed down by global uncertainties such as tariffs and persistent geopolitical tensions.

This follows heavy outflows of ₹34,990 crore in August and ₹17,700 crore in July, taking the total equity sell-off by Foreign Portfolio Investors (FPIs) in 2025 to ₹1.38 lakh crore, according to depository data.

Looking ahead, market experts believe that upcoming macroeconomic data from India and the U.S., along with progress in tariff negotiations, will be key drivers of FPI flows in the coming week.

Although FPIs remain net sellers in September, with cumulative equity outflows of ₹7,945 crore till September 19, their selling has moderated. In fact, during the latest week, they briefly turned net buyers, purchasing ₹900 crore of equities after the U.S. Federal Reserve cut interest rates by 25 basis points.

“For the current week FPIs bought Indian equities worth ₹900 crore on the back of the Fed’s rate cut. With two more cuts projected in 2025, liquidity in global markets could improve significantly. However, FPIs remain net sellers in September,” said Vaqarjaved Khan, Senior Fundamental Analyst, Angel One Ltd.

Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, noted that foreign investors made a “modest but noticeable return” to Indian equities during the week.

He said the Fed’s dovish stance, coupled with easing U.S.-India trade frictions and India’s stable macroeconomic outlook, lifted sentiment. However, he cautioned that lingering global uncertainties and geopolitical risks continue to keep flows cautious.

Echoing this view, V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services, pointed out that FII selling in India has coincided with buying in other Asian markets such as Hong Kong, Taiwan, and South Korea – a strategy that has been profitable so far this year. “This scenario may change going forward,” he added.

On the other hand, debt markets witnessed investment, FPIs invested about ₹900 crore under the general limit and ₹1,100 crore through the voluntary retention route.

Foreign investors have pulled out nearly ₹18,000 crore from Indian equities so far this month, weighed down by escalating U.S.-India trade tensions, disappointing first-quarter corporate earnings, and a weakening Indian rupee.

With this, the total outflow by Foreign Portfolio Investors (FPIs) in equities has reached ₹1.13 lakh crore so far in 2025, according to data from the depositories.

Going forward, FPI sentiment is expected to remain “fragile and in risk-off mode,” with tariffs and trade negotiations emerging as key factors to watch out for in the coming week, according to Vaqarjaved Khan, CFA, Senior Fundamental Analyst at Angel One.

The data showed that FPIs withdrew a net sum of ₹17,924 crore from equities in this month (till August 8). Foreign investors had pulled out ₹17,741 crore on a net basis in July. Before that, FPIs invested ₹38,673 crore in the preceding three months from March to June.

The latest outflows were primarily due to escalating U.S.-India trade tensions, disappointing first-quarter corporate earnings and a weakening Indian rupee, Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said.

From August 1, the U.S. imposed a 25% tariff on Indian goods and increased these tariffs by an additional 25% during the current week. This spooked the markets and FPIs, leading to a massive sell-off in Indian equities, Angel One’s Khan said.

Along with tariffs, rising U.S. Treasury yields also led to foreign money moving towards treasuries, he added.

On the other hand, FPIs invested ₹3,432 crore in the debt general limit and put in ₹58 crore in the debt voluntary retention route during the period under review.