In the first half of April 2025, Foreign Portfolio Investors (FPIs) exhibited a dramatic shift in risk appetite, withdrawing a net ₹33,927 crore from Indian equities before executing a tactical rebound of ₹10,824 crore over just two trading days (April 15–17), trimming the month’s net outflow to around ₹23,103 crore . Technology stocks were the hardest hit, with FPIs offloading ₹13,828 crore over 40% of total equity outflows amid fears of a U.S. economic slowdown and tariff uncertainty . In stark contrast, defensive domestic themes like telecom (₹2,137 crore) and FMCG (₹587 crore) attracted fresh capital, signalling a rotation into sectors perceived as insulated from global shocks . Meanwhile, debt investments via the Fully Accessible Route (FAR) remained robust, with weekly inflows exceeding ₹7,500 crore, underpinned by RBI-maintained FPI caps and India’s imminent inclusion in global bond indices. This deep-dive unpacks daily flow patterns, sectoral rotations, macro catalysts (rate cuts, tariff pauses, elections), currency and commodity impacts, and the psychological biases steering FPI behaviour.

Early-April Equity Sell-Off : A Sentiment Shock

FPIs began April 2025 with aggressive equity selling, pulling out ₹6,335.66 crore on April 2 alone as U.S. President Trump threatened broad reciprocal tariffs on Indian exports, heightening global risk aversion . The sell-off continued with outflows of ₹1,060.32 crore (April 3) and ₹2,958.56 crore (April 4), even as domestic markets began pricing in a 25 bps RBI rate cut . By April 8, fresh trade-war jitters sent FPIs scrambling for safety, resulting in ₹8,931.15 crore of net equity withdrawals, marking the week’s steepest daily exit. These transactions underscore FPIs’ reflexive response to headline risk, often precipitated by policy noise rather than fundamental valuation mismatches. Tech stocks bore the brunt of the April sell-off, as FPIs offloaded a staggering ₹13,828 crore, equivalent to over 40% of total equity outflows . Export-oriented IT names were particularly vulnerable due to recency bias—fresh fears of a U.S. slowdown led investors to anchor on negative news, sidelining the sector’s resilient order books . The net selling drove the Nifty IT index down 7.5% in H1 April, starkly diverging from the Nifty 50’s 0.8% gain over the same period. Ye data dikhata hai ki FPIs kitne sensitive ho gaye hain global macro cues pe, especially jab earnings recovery ko lekar uncertainty high ho.

Selective Defensive Accumulation

In the midst of broad-based selling, FPIs picked defensives: telecom saw net purchases of ₹2,137 crore, while FMCG attracted ₹587 crore in early April . Analysts attribute this to loss aversion, where investors prefer sectors with predictable cash flows amid volatility . Banking, power, and consumer-durables also received modest uphill flows as onshore fundamentals strong domestic consumption and stable yield curves—outweighed global uncertainties . Ye “flight to quality” narrative underscores how FPIs distinguish between export-linked cyclical plays and sheltered domestic franchises when markets gyrate.

After nine straight sessions of net selling, FPIs flipped to buyers on April 15–17, injecting ₹6,798 crore, ₹4,026 crore, and ₹481 crore respectively, totalling ₹10,824 crore in just two trading days . This late-week turnaround followed a 90-day tariff pause by the U.S., which exempted electronics like smartphones and computers, easing trade-war anxieties temporarily. The tactical rebound trimmed monthly net equity outflows to approximately ₹23,103 crore, demonstrating FPIs’ agility in buying oversold levels once headline risk abates. Once selling commenced, FPIs converged on exit strategies, magnifying outflows even as valuations dipped into bargain levels “Kya bolte broker sahab, dip pe khareedne ka mauka mil gaya!” echoes the sentiment on trading floors.

Debt Markets : FAR Remains the Focus

Meanwhile, debt became the favoured asset class. Weekly net inflows into the Debt-FAR segment surpassed ₹7,500 crore (₹5,433 crore on April 2; ₹1,310 crore on April 16), as FPIs sought liquid, high‐real‐yield sovereign paper ahead of India’s bond index inclusion. Debt-General Limit and Debt-VRR flows were mixed—small net buys on some days, outs on others—reflecting anchoring to retention risks and curve anticipation. With the RBI maintaining generous FPI caps (₹2.79 trillion for G-Secs; ₹8.22 trillion for corporate bonds), headroom remains ample, cementing debt as a structural portfolio anchor.

RBI’s Accommodative Pivot and Transmission

On April 9, the Reserve Bank of India cut the repo rate by 25 bps to 6% and shifted its stance to “accommodative,” aiming to support growth amid sticky 5% retail inflation . The policy pivot lowered yields on benchmark G-Secs by ~10 bps and prompted banks like Bank of India to cut their RBLR from 9.1% to 8.85% effective April 9 . However, cautious FPIs held back fresh equity bets given global uncertainties, instead channelling funds into debt, reflecting prospect theory preferring sure gains in bonds over potential equity upside.

Other Factors to Consider

U.S. Trade Policy :

Tariff Tango - Global trade tensions set the tone for early-April flows. On April 2, President Trump threatened 10% reciprocal tariffs on major U.S. trading partners, roiling markets . Yet, on April 11, he paused certain electronics levies for 90 days exempting smartphones, PCs, and semi-conductors to restart trade talks, offering temporary relies. U.S. Customs clarified exemptions include HTSUS codes covering semiconductors and essential devices. Despite the pause, the recency bias kept FPIs tentative, delaying full equity re-entry until mid-week. Swift equity exits at the first hint of tariffs exemplify the preference to avoid potential losses over chasing gains.

Currency Flows :

INR’s Narrow Trading Band - The rupee traded within a tight ₹85.38–₹86.20 range in mid-April, supported by RBI intervention and strong forex reserves . A weaker dollar, dragged down by tariff worries, also aided INR strength . Nonetheless, FPIs hedged currency exposure conservatively, as sudden tariff policy reversals by the U.S. injected episodic volatility, reinforcing a cautious stance on fresh equity commitments until FX risks clear.

Oil Prices :

A Double-Edged Sword - Brent crude hovered around $66–68 per barrel, pressured by OPEC+ production increases and sliding demand expectations due to tariffs. A report noted a 20% plunge in crude within a week of tariff announcements, hitting four-year lows and squeezing energy exporters. Lower oil prices eased India’s import bill and supported the current account, yet raised concerns about global growth, reinforcing FPIs’ risk-off tilt during peak tariff headlines.

Key Takeaways

• FPIs pulled out ₹32,121 crore from Indian equities in April 2025, bringing total 2025 equity outflows to ₹1.49 lakh crore.

• The Nifty IT index plunged about 7.5% in the first half of April, underscoring the tech sector’s heavy FPI sell-off.

• After a nine-session sell-off, FPIs turned net buyers on April 15–17, injecting ₹10,824 crore in just two trading days.

• FPIs rotated into defensive sectors such as telecoms amid mid-April volatility, seeking steadier cash flows.

• Consumer goods stocks also saw selective FPI buying, reflecting a shift toward domestic-oriented themes.

• Weekly net inflows into Debt-FAR exceeded ₹7,500 crore, highlighting continued confidence in India’s sovereign bonds.

• The RBI cut its key repo rate by 25 bps to 6% on April 9, shifting to an “accommodative” stance to support growth.

• The rupee traded in a narrow ₹85.70–₹86.70 range mid-April, mirroring global risk-off sentiment linked to trade-policy gyrations.

• Brent crude hovered around $64–$69 per barrel mid-April, easing India’s oil import bill but signaling softening demand.

• India’s retail inflation slowed to 3.34% in March 2025, the lowest in over five years, boosting real-yield appeal for debt.