Foreign investors continued their selling spree in Indian equities during April, withdrawing Rs 60,847 crore from the market. This follows a massive sell-off in March, when overseas investors offloaded shares worth Rs 1,17,775 crore, according to data from the National Securities Depository Limited.
The back-to-back withdrawals have pushed cumulative foreign portfolio investor (FPI) outflows from Indian equities to Rs 1,91,969 crore in 2025 so far, signaling sustained weakness in overseas investor sentiment toward domestic markets.
Shift in Global Capital
Market experts attribute the trend to a broader shift in global capital toward Asian economies perceived as stronger beneficiaries of the ongoing artificial intelligence-led investment boom. V K Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that investor appetite is increasingly shaped by the AI trade, particularly in markets with large semiconductor and technology players.
"An important factor driving capital flows is the AI trade, particularly in South Korea and Taiwan," he said. Countries such as Japan, South Korea, and Taiwan are drawing sizeable foreign inflows, while India and several other emerging markets are seeing capital move out as they contend with pressures including the energy crisis and weaker currencies.
Concentration of Investments
Vijayakumar highlighted that foreign investments are being concentrated in a small group of companies delivering strong returns and closely tied to the AI growth story. "Two companies in South Korea—Samsung and SK Hynix—and one in Taiwan—TSMC—are attracting the lion's share of these inflows. The excellent results being posted by these companies are providing fundamental support to the FPI flows into these markets," he added.
He also cautioned that India could continue to face FPI outflows as long as the global AI investment cycle remains the dominant market driver. "So long as the AI trade continues, the trend of FPI outflows from India is likely to continue," he said, while also noting concerns about overvaluation in AI-related stocks.
