FPI exodus hits Rs 88,180 cr in March as West Asia tensions, oil surge rattle markets

Sectorally, financial services stocks have borne the brunt of the outflows, with FPIs selling shares worth Rs 31,831 crore during the fortnight ended March 15.

• FPIs withdrew Rs 88,180 crore from Indian equities in March 2026
• Outflows on high crude, weak rupee, and rising US yields
• Financial services stocks saw Rs 31,831 crore FPI selling

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Foreign portfolio investors (FPIs) have pulled out Rs 88,180 crore (around $9.6 billion) from Indian equities so far in March, reversing February’s strong inflow and highlighting growing concerns over global and domestic headwinds.

According to NSDL data, FPIs have remained net sellers on every trading day this month (till March 20), marking one of the most sustained sell-offs in recent times. While the outflow is significant, it is still slightly below the record Rs 94,017 crore withdrawal seen in October 2024.

The latest selling has pushed total FPI outflows in 2026 past the Rs 1 lakh crore mark, underscoring the sharp shift in investor sentiment after February’s robust inflow of Rs 22,615 crore, the highest in 17 months.

Market participants attribute the reversal primarily to escalating geopolitical tensions in West Asia, which have raised fears of prolonged conflict and potential disruption to oil supplies through the Strait of Hormuz. This has pushed Brent crude prices above $100 per barrel, triggering a global risk-off sentiment.

Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said the spike in crude prices amid geopolitical uncertainty has been a key trigger for the sell-off. He added that additional pressures stem from the rupee weakening to near Rs 92 against the US dollar, elevated US bond yields, profit-booking after February’s rally, and concerns over margin pressures in the upcoming Q4 earnings season.

Himanshu Srivastava, Principal Manager – Research at Morningstar Investment Research India, pointed to rising US Treasury yields as another major factor. Higher yields have made dollar-denominated assets more attractive, leading to capital outflows from emerging markets like India. This shift is typically accompanied by a stronger dollar and tighter global liquidity, further dampening investor appetite for equities.

Echoing similar concerns, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said multiple factors, including global equity market weakness, rupee depreciation, and elevated crude prices, have combined to intensify FPI selling.

Sectorally, financial services stocks have borne the brunt of the outflows, with FPIs selling shares worth Rs 31,831 crore during the fortnight ended March 15.

Looking ahead, analysts expect volatility to persist in the near term. Continued geopolitical tensions or further spikes in oil prices could sustain outflows, while any signs of de-escalation, stronger support from domestic institutional investors (DIIs), or positive earnings surprises may help stabilise markets.

A durable reversal in FPI flows, experts say, is likely only when geopolitical risks ease and broader global market stability returns.