Foreign portfolio investor (FPI) flows into Indian equities have turned negative again in March so far and are likely to remain volatile in the near term due to heightened geopolitical tensions in West Asia, according to analysts at Antique Stock Broking.
The brokerage expects flows to normalise once tensions ease, supported by relatively reasonable valuations versus developed markets, a likely recovery in corporate earnings over financial years 2026 to 2028 (FY26-28) on a low base, strong macro-economic fundamentals, and low FPI ownership in India.
So far this year, global funds have sold Indian equities worth ₹86,285 crore, according to NSDL data. In calendar year 2025, total FPI outflows stood at over ₹1.66 trillion. In 2026 so far, FPIs sold shares worth ₹35,962 crore in January, but turned net buyers in February with inflows of ₹22,615 crore, the highest monthly buying since September 2024.
Antique noted that both mutual funds and FPIs continue to hold a negative stance on investment-linked sectors such as capital goods, power utilities and cement, while maintaining an overweight or less underweight position on consumer-linked sectors including automobiles, consumer durables and fast-moving consumer goods. The negative stance on financials has moderated in recent months.
The report highlighted divergent positioning between mutual funds and FPIs in sectors such as chemicals, consumer services, information technology services and telecom.
In February, mutual funds increased exposure to consumer services, information technology (IT) services, cement and telecom, while reducing positions in metals and mining, power, automobiles and oil and gas. In contrast, FPIs were relatively more active buyers in capital goods, metals and power, while they sharply reduced exposure to information technology services, Antique Stock Broking said.
READ | Microcaps in value zone, but West Asia war may delay recovery: Samco Sec
Further, foreign brokerages have started to cut their year-end targets for the Nifty 50 index amid the
ongoing West Asia conflict. Nomura now sees the Nifty 50 index at 24,900 levels, down 15 per cent versus its earlier target of 29,300. Citi Research, too, have cut their 2026-end Nifty target by 5.2 per cent to 27,000.
Through this phase of market correction, Nomura expects coal, oil producers, healthcare, pharma, staples, and telecom sectors to outperform. While the research and brokerage house remains constructive on these sectors, it finds valuations demanding in the healthcare and staples spaces.
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