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Foreign Funds Deepen India Selloff Despite Ceasefire, Prompting Calls to Cut Trading Taxes

Fresh outflows signal foreign caution over India’s cost and risk profile.

Overview

  • Foreign portfolio investors pulled Rs 46,149 crore from Indian stocks so far in April, with Rs 8,205 crore sold over two sessions even after a two‑week USIran ceasefire lifted prices.
  • Market data show the heaviest monthly FPI equity outflow on record in March and the biggest annual exit in FY2025–26 since records began.
  • Zerodha’s Nithin Kamath said global interest has “pretty much died out,” citing oil shock risk, rich valuations, rupee weakness and a thin pipeline of AI plays, and he urged a rollback of recent capital‑gains and securities transaction taxes.
  • Zoho’s Sridhar Vembu countered that India should not chase fickle foreign inflows and should focus on building domestic technology strength instead.
  • India imports about 85–88% of its oil through routes such as the Strait of Hormuz, which leaves the rupee vulnerable when crude spikes and can shrink dollar returns for overseas investors.