Foreign portfolio investors (FPIs) pulled out a record ₹1.04 trillion ($11.28 billion) in March 2026 amid escalating geopolitical tensions in West Asia, the latest data available on NSDL suggests.
Earlier in October 2024, FPIs offloaded a net amount of ₹94,017 crore ($11.19 billion) from the equity market mainly due to a strategic shift to cheaper Chinese equities, high domestic valuations, and geopolitical tensions.
In this backdrop, the BSE Sensex and Nifty 50 have slipped 10.6 per cent each so far in March, data shows.
Domestic institutional investors (DIIs), on the other hand, have made a net investment of ₹1.13 trillion during this period, exchange data suggests. This has helped prevent deeper cuts to the indices. In the process, DIIs extended their buying streak to 32 months, supported by systematic investment plan (SIP) flows.
“Sharp underperformance of India versus the other emerging markets (EMs) last year, normalisation of India’s premium over EMs’, underweight positioning of foreign institutional investors (FIIs), the size of India’s economy, strong growth prospects, and strong macros should encourage FIIs over time to not just sell but buy,” wrote Prashant Jain, chief investment officer (CIO) and fund manager at 3P Investment Managers, in a co-authored note with Ashwani Kumar, their portfolio strategist and co-fund manager.
“Poor returns from India vis-a-vis other markets — both developed and emerging — during the last eighteen months are the principal reason for FPIs’ indifference towards India. If their sustained selling strategy is to change, there should be clear indications of earnings recovery back home. In the present uncertain context, this will take time,” said V K Vijayakumar, chief investment strategist at Geojit Investments.
The complete negative stance of the FPIs towards India, he said, is also evident from the fact that they are selling recklessly without regard for valuations.
“The financial services sector is performing well, and valuations are fair. Despite this, FPIs sold massively (₹31,831 crore for fortnight ending March 15) because it accounts for about 32 per cent of their assets under custody. The sector has liquidity, making it easy to sell and exit. A reversal of the FPI selling will happen only when the war ends and normalcy returns to the market,” Vijaykumar added.
Going ahead, U R Bhat, co-founder & director, Alphaniti Fintech, expects DII buying, too, to slow down as war-related concerns persist and crude oil prices stay elevated.
