New Delhi, March 22 Foreign investors have pulled out approximately USD 9.6 billion (₹88,180 crore) from Indian equities this month, driven by escalating tensions in the Middle East, a weakening rupee, and concerns about the impact of high crude oil prices on India's growth and corporate earnings.
This sharp sell-off follows a strong rebound in February, when foreign portfolio investors (FPIs) invested ₹22,615 crore, the highest monthly inflow in 17 months, according to NSDL data.
With these latest withdrawals, total FPI outflows have crossed the ₹1 lakh crore mark so far in 2026.
In March (up to March 20), FPIs have remained net sellers on every trading day, offloading equities worth ₹88,180 crore in the cash market. However, the outflow is still lower than the record monthly exodus of ₹94,017 crore seen in October 2024.
Market participants attribute the sustained selling pressure to global macroeconomic headwinds and heightened geopolitical uncertainty.
Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said that the primary trigger has been the sharp escalation in Middle East tensions, with fears of prolonged conflict and potential disruption to the Strait of Hormuz pushing Brent crude above USD 100, fueling a classic risk-off move.
He added that the trend has been exacerbated by the rupee hovering near ₹92 against the US dollar, elevated US bond yields, profit-booking after the February inflows, and mixed Q4 earnings outlook indicating margin pressures in key sectors.
Himanshu Srivastava, Principal Manager Research at Morningstar Investment Research India, said that rising US Treasury yields have also been a key driver.
Higher yields have improved the relative attractiveness of dollar-denominated assets, prompting capital to move away from emerging markets like India. This shift is typically accompanied by a stronger dollar and tighter global liquidity, further dampening sentiment towards emerging market equities.
Echoing similar concerns, V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said that the conflict in the Middle East has intensified FPI selling.
He noted that weakness in global equity markets, continued rupee depreciation, and worries over the impact of high crude prices on India's growth and earnings have all weighed on investor sentiment.
Sectorally, financial services bore the brunt of the selling, with FPIs offloading shares worth ₹31,831 crore during the fortnight ended March 15.
Looking ahead, analysts expect the near-term outlook to remain cautious.
Khan said that continued volatility in oil prices or further escalation in geopolitical tensions could sustain outflows. However, any signs of de-escalation, strong support from domestic institutional investors (DIIs), or positive earnings surprises may help stabilize markets and trigger selective buying.
According to Vijayakumar, a reversal in FPI flows is likely only once geopolitical tensions ease and broader market stability returns.