Foreign portfolio investors (FPIs) sold equities worth Rs 21,000 crore in India over the last four trading sessions, as escalating conflict in West Asia rattled global markets, according to depository data.
The sell-off follows a record monthly FPI inflow of Rs 22,615 crore in February, the highest in 17 months. Prior to that, FPIs had been net sellers for three consecutive months, offloading Rs 35,962 crore in January, Rs 22,611 crore in December, and Rs 3,765 crore in November.
The latest withdrawals occurred during March 2-6 in the cash market, with March 3 observing a trading holiday for Holi. Analysts attributed the outflows primarily to heightened geopolitical risks following a US-Israel attack on Iran on February 28, which killed Iran’s Supreme Leader Ayatollah Ali Khamenei.
Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said, “Fears of potential disruptions in the Strait of Hormuz pushed Brent crude prices above USD 90 per barrel, triggering a global risk-off sentiment.” He added that rupee depreciation beyond 92 per dollar, rising US Treasury yields, and mixed early forecasts for Q4 FY26 corporate earnings, particularly in IT and consumption, also weighed on investor sentiment.
Also read: Import tariff overhaul will lower trade costs: GTRI
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted, “Uncertainty surrounding the Middle East conflict, the recent market correction, the Indian economy’s vulnerability to a sharp rise in crude prices, and the depreciation of the rupee have all contributed to sustained FPI selling in the cash market.”
Himanshu Srivastava, Principal Manager Research at Morningstar Investment Research India, observed that higher crude prices elevate risks for inflation, the current account deficit, and currency stability, typically discouraging foreign investment in emerging markets. He added that investors are also gravitating towards safer assets such as the US dollar amid uncertainty.
Looking ahead, Vijayakumar said FPIs are unlikely to return as buyers until geopolitical tensions ease and crude prices moderate. “Brent crude trading above USD 90 per barrel is negative for the Indian economy and equity markets,” he said.
Despite sustained foreign selling, domestic institutional investors (DIIs) and systematic inflows from mutual fund SIPs have provided support, helping key indices stabilise in recent sessions.
Follow us
