The broader sell-off was triggered by global trade tensions and reciprocal tariffs announced by the US.
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After turning net buyers in late March, foreign portfolio investors (FPIs) resumed the sell-off in the first half of April, pulling out a net amount of ₹33,927 crore from Indian equities. Technology stocks bore the brunt of the sell-off, with the worst fortnightly outflows in over a year, even as telecom and FMCG sectors saw selective buying.

Data from NSDL shows FPIs offloaded ₹13,828 crore worth of technology stocks—over 40 per cent of the total outflows—amid growing fears of a slowdown in the US economy and uncertainty around global tariffs. Financial services and capital goods followed, with outflows of ₹4,501 crore and ₹3,019 crore respectively.

The Nifty IT index fell 7.5 per cent in the first half of April, compared to a 0.8 per cent gain in the benchmark Nifty 50. Analysts attributed the tech exodus to concerns over US demand and bleak outlook for earnings recovery amid tariff volatility in the near-term.

Selective buying

In contrast, telecom, FMCG, power, and media sectors attracted fresh capital. FPIs tilted towards domestic themes, buying shares of telecom companies worth ₹2,137 crore, and ₹587 crore worth shares of FMCG companies.

The broader sell-off was triggered by global trade tensions and reciprocal tariffs announced by the US. However, a recent 90-day tariff pause and exemptions for key electronics like smartphones and computers have revived risk appetite, with FPIs turning net buyers over the past two sessions.

“At present, the domestic macroeconomic environment remains supportive, encouraging investors to increase their exposure to riskier assets for the long term,” said Vinod Nair, Head of Research at Geojit Financial Services. However, he cautioned against export-oriented stocks such as IT, and rather focus on domestic themes of banking and consumer goods, as tariff uncertainties can’t be completely ruled out.

Trend reversal?

In just two trading sessions, FPIs have bought ₹10,824 crore, reducing April’s net outflows to ₹23,103 crore. However, analysts believe it’s too early to call it a trend reversal. In the first three months of 2025, FPIs had cumulatively withdrawn ₹1.16 lakh crore, with ₹3,973 crore pulled out in March, ₹34,574 crore in February, and ₹78,027 crore in January.

Shrikant Chouhan, Head of Equity Research at Kotak Securities expects FPI flows to remain volatile going ahead as investors have turned their attention towards the likely muted March quarter earnings.

“A clear pattern in FPI strategy will emerge only after the ongoing chaos dies down. In the medium term FIIs are likely to turn buyers in India since both the US and China are heading for an inevitable slowdown as a result of the ongoing trade war,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

Even in an unfavourable global scenario India can grow by 6 per cent in FY 26. This, along with better earnings growth expected in FY 26, can attract FPI investments into India once the dust in the market settles down, he said.

Published on April 18, 2025

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