India’s stock markets came under heavy pressure this week as escalating US tariffs triggered sharp foreign investor outflows, leading to a steep decline in equities and pushing the rupee to a record low. According to data from NSE, foreign portfolio investors (FPIs) have pulled out nearly $4 billion from Indian equities in the last two weeks alone, making it the sharpest outflow since March 2020.
The benchmark Nifty 50 fell over 2% in Friday’s trade, marking its worst weekly performance in eight months, while the Sensex shed more than 1,500 points. Market analysts told Economic Times that the selling spree was driven by fears that higher US tariffs on imports from China and select Asian economies could disrupt global trade flows, impacting India’s export-heavy sectors such as IT, metals, and textiles.
The rupee tumbled to an all-time low of 84.23 against the US dollar on Friday, as reported by Business Standard. Currency dealers said the Reserve Bank of India intervened intermittently to curb volatility, but sustained dollar demand from importers and outflows from equity markets weighed heavily on the currency.
In addition, the 10-year government bond yield climbed to 7.30%, its highest in four months, reflecting investor concerns over potential imported inflation and tighter liquidity. A report from Mint highlighted that domestic mutual funds attempted to cushion the fall by stepping up purchases, but the heavy FPI exits overshadowed local support.
Market experts believe volatility is likely to persist in the near term. With US tariffs showing no sign of easing and global crude oil prices hovering above $90 per barrel, India’s twin deficits–trade and current account-may remain under stress, further limiting rupee recovery.
