Daijiworld Media Network – Mumbai
Mumbai, Mar 8: Foreign portfolio investors (FPIs) turned heavy sellers in Indian equities during the first week of March, withdrawing nearly Rs 21,000 crore (about $2.3 billion) from the cash market amid weakening global risk appetite due to rising geopolitical tensions in the Middle East.
The withdrawals took place between March 2 and March 6, covering four trading sessions, as markets remained closed on March 3 for the Holi festival.
The latest outflows follow a strong performance in February when overseas investors had invested Rs 22,615 crore in Indian stocks, marking the highest monthly inflow in 17 months. However, before that rebound, FPIs had remained net sellers for three consecutive months, withdrawing Rs 35,962 crore in January, Rs 22,611 crore in December, and Rs 3,765 crore in November, according to data from depositories.
Market analysts attributed the recent outflows largely to rising geopolitical tensions in the Middle East following coordinated strikes by the United States and Israel on Iran on February 28 that killed Iran’s Supreme Leader Ali Khamenei, triggering a wider regional conflict.
Vaqarjaved Khan, senior fundamental analyst at Angel One, said concerns over potential disruptions in the Strait of Hormuz pushed Brent crude prices above $90 per barrel, creating a global risk-off sentiment among investors.
He also pointed to additional factors affecting foreign investment, including the depreciation of the Indian rupee beyond the 92-per-dollar mark, rising US Treasury yields attracting capital into safer assets, and uncertain corporate earnings outlook for the fourth quarter of FY26, particularly in the IT and consumption sectors.
VK Vijayakumar, chief investment strategist at Geojit Investments, said uncertainty surrounding the Middle East conflict, recent market corrections, the Indian economy’s vulnerability to higher crude oil prices, and the weakening rupee have all contributed to sustained FPI selling.
Himanshu Srivastava, principal manager research at Morningstar Investment Research India, noted that elevated crude oil prices raise concerns over inflation, the current account deficit and currency stability, which typically dampen foreign investor sentiment towards emerging markets.
He added that global investors have increasingly shifted funds into safer assets such as the US dollar amid growing uncertainty, with rising US Treasury yields further accelerating capital outflows from emerging markets.
Analysts said overseas investors may remain cautious in the near term until geopolitical tensions ease and crude oil prices stabilise.
Despite persistent selling by foreign investors, Indian equity markets have continued to receive support from domestic institutional investors (DIIs) and steady inflows through mutual fund systematic investment plans (SIPs).