Foreign Investors Withdraw $9.6 Billion from Indian Equities Amid Global Uncertainty
New Delhi, March 22: Foreign investors have pulled out around USD 9.6 billion (₹88,180 crore) from Indian equities in March, driven by escalating Middle East tensions, a weakening rupee, and concerns over the impact of high crude oil prices on India's growth and corporate earnings.
This sharp sell-off follows a strong February rebound, when foreign portfolio investors (FPIs) injected ₹22,615 crore—the highest monthly inflow in 17 months, according to NSDL data. With March outflows, total FPI withdrawals in 2026 have already exceeded ₹1 lakh crore.
So far this month (up to March 20), FPIs have been net sellers on every trading day, offloading ₹88,180 crore in the cash market. However, this is still below the record monthly outflow of ₹94,017 crore in October 2024. Market participants cite global macroeconomic headwinds and heightened geopolitical uncertainty as the primary drivers.
Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said the surge in Middle East tensions, fears of prolonged conflict, and potential disruptions to the Strait of Hormuz—pushing Brent crude above USD 100—triggered the risk-off sentiment. He added that a weak rupee near ₹92 against the US dollar, elevated US bond yields, profit-booking after February inflows, and mixed Q4 earnings forecasts have further amplified selling pressure.
Himanshu Srivastava, Principal Manager Research at Morningstar Investment Research India, highlighted that rising US Treasury yields have made dollar-denominated assets more attractive, prompting capital outflows from emerging markets like India. This shift, coupled with a stronger dollar and tighter global liquidity, has weighed on investor sentiment.
Echoing similar concerns, V K Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that Middle East conflict, global equity weakness, rupee depreciation, and high crude oil prices are all discouraging foreign investment.
Sector-wise, financial services were hardest hit, with FPIs selling shares worth ₹31,831 crore during the fortnight ended March 15.
Looking ahead, analysts expect continued caution. Khan said that further oil price volatility or geopolitical escalation could sustain outflows, whereas easing tensions, strong support from domestic institutional investors (DIIs), or positive earnings surprises may stabilize markets and trigger selective buying. Vijayakumar added that a reversal in FPI flows is likely only once geopolitical tensions ease and market stability returns.
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