U.S. investors cautious as tariff pause deadline nears: Elara Capital
U.S. based funds had a weekly outflow of $44 million in the past week, the first time in the past two months there is an outflow, according to a report from Elara Capital.
'While the outflow is not significant, it potentially signals a pause in the two-month positive flow trend that had added up to $1.6bn,' the report said.
U.S. funds invested $388 million into the Indian financial markets. This moderated to $73 million in the past week. Moreover, India is the only emerging economy where there is a lacklustre inflow into the market. Other emerging economies including Brazil, South Korea among others continued to receive foreign investments for eight consecutive weeks.
'Indian market is still expensive for the foreign funds and they are in wait and watch mode as the end of U.S. tariffs come to an end,' said Sunil Jain, V-P of Elara Capital.
To be sure, the India VIX index, which measures stock market volatility, closed at 15.08 points on Friday (June 13), about 3.1% more than the close of 14.63 points on June 6.
Further, Elara Capital said that gold funds had recovered from their redemptions, with an inflow of about $12.4 billion in the past three weeks. When securities markets turn volatile, investors usually take to investing in gold, as they are considered safe havens.
Foreign portfolio investors (FPI) withdrew the most in October 2024, after which it turned positive in April 2025. The expensive valuations as against earnings growth, currency depreciation and the potential of the then incoming President of the United States prompted expectations of strengthening of the American economy.
The tariff, however, turned out to be uncertain for the global markets, which led to a return to Indian markets among other emerging markets. As the deadline for the 90-day pause nears, experts believe that foreign investors may be cautious of any big increases in India exposures.
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