This impact was rapidly reflected in FPI flows, with net flows of over 10,000 rupees being observed from the Indian market by April 5th. Global uncertainty has put FPI in a waiting mode, but India’s robust macroeconomic foundations and support policy environment continue to provide long-term investment appeal, especially compared to its other Asian colleagues.
Dr. VK Vijayakumar, chief investment strategist at Geojit Financial Services, highlighted the shift directly, saying, “The trend that changed buyers over FPIs in March changed when FPIs became sellers again in early April.” The trigger arrived on April 2nd, when President Trump announced mutual tariffs and brought about a major trend reversal in the global stock market.
The scale of the tariffs exceeded expectations. “The 10% baseline tariff on all imports, the 25% tariff on all automobile imports and sudden mutual tariffs in most countries” is expected to raise US inflation, as Vijayakumar pointed out. He warned of the broader economic risks, saying there are concerns that the US economy might fall into a stag.”
This led to massive sales in the US market where the S&P 500 and Nasdaq lost by more than 10% in two days.
The fallout was not confined to the west. China’s rapid response has further heightened tensions. “China’s retaliation against US tariffs was quick,” he observed, adding that “a completely blown away trade war will affect world trade and global economic growth.” For now, he believes foreign investors are hesitant. As of April 5, “Total FPI sales in India were Rs 10,354.” Despite this cautious global background, BDO India’s partner and leader in FS tax, tax and regulatory services, Manoj Purohit is optimistic about India’s ability to attract foreign capital over the long term. He noted that “the optimism is high for both India and FPI, which are revived markets, at the beginning of the new fiscal year.” “India remains an attractive destination to attract the world’s capital,” he says, with the recent US tariffs on Indian goods being relatively modest compared to other Asian countries, offering a strong proposal to provide India with viable export opportunities.
Purohit highlighted India’s position as one of the fastest growing economies supported by a vast consumer market, a skilled workforce and business-friendly reforms.
The RBI’s decision to maintain FPI bonds and G-sec limits is also considered a positive signal. “The recent moves by the RBI are evidence of the government’s intention to keep the gateway open for offshore participants,” he added.
While short-term volatility is sustained through global development, both analysts suggest that India’s economic foundations, infrastructure drives, and diversifying trade strategies provide compelling cases for long-term investments. Purohit summed up by saying, “The Indian economy now appears to be insulated to survive temporary headwinds due to macro changes and high ratings, harsh revenues and domestic triggers of rising costs of inflation.”
As the market is now looking at RBI’s future policy stance and evolving tariff situation, investors’ sentiment maintains a delicate balance between attention and long-term trust.
(Disclaimer: The recommendations, suggestions, opinions and opinions given by experts are their own. (These do not represent views of the economic era)
