Foreign portfolio investors (FPIs) have withdrawn a record Rs 1.14 lakh crore (about USD 12.3 billion) from Indian equities in March, marking the highest monthly outflow on record, driven by escalating tensions in West Asia, a weakening rupee, and concerns over elevated crude oil prices impacting growth.
With one trading session still remaining, the outflows may extend further. The previous record monthly exodus stood at Rs 94,017 crore in October 2024.
Data from NSDL shows that total FPI outflows have reached Rs 1.27 lakh crore so far in 2026. In March alone, FPIs remained consistent sellers, offloading equities worth Rs 1,13,380 crore in the cash market till March 27.
The sharp sell-off follows a strong reversal from February, when FPIs had invested Rs 22,615 crore, the highest monthly inflow in 17 months.
Market participants have linked the sustained selling pressure to global macroeconomic headwinds and rising geopolitical uncertainty following the outbreak of conflict in West Asia.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said, “The weakness in global equity markets following the war in West Asia, the steady depreciation of the rupee, fears of decline in remittances from the Gulf region and concerns surrounding the impact of high crude prices on India's growth and corporate earnings contributed to the sustained selling by FPIs.”
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He added that the external environment has significantly altered investor sentiment towards emerging markets, including India.
Himanshu Srivastava, Principal – Manager Research at Morningstar Investment Research India, attributed the outflows to tightening global financial conditions. “Additionally, the selling has been driven by a combination of elevated US bond yields and tightening global liquidity, which have improved the relative attractiveness of developed market fixed income,” he said.
He further noted, “While Indian market valuations have corrected alongside the recent market decline, they continue to remain relatively elevated compared to several emerging market peers, which may still be prompting selective profit booking and reallocation.”
The trend is not limited to India, with FPIs also pulling out funds from other emerging markets such as Taiwan and South Korea, reflecting a broader risk-off sentiment in global equity markets amid geopolitical tensions.
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