New Delhi, March 8
Foreign portfolio investors withdrew Rs 21,831 crore from Indian equities over the last week from four trading sessions amid deteriorating global risk sentiment tied to the West Asia conflict, exchange data showed.
The recent sell-off followed a strong February, when FPIs infused Rs 22,615 crore into Indian equities, posting the largest monthly inflow in 17 months.
Foreign investors were net sellers for three straight months prior to February, pulling Rs 35,962 crore in January, Rs 22,611 crore in December and Rs 3,765 crore in November.
However, domestic institutional investors (DIIs) continued to provide support in March, infusing approximately Rs 32,786 crore, aided by steady SIP flows and long-term domestic participation.
Market participants attributed the March sell‑off to rising geopolitical tensions after the US and Israel launched strikes on Iran, which analysts said raised fears of supply disruptions through the Strait of Hormuz and pushed Brent crude above $90 a barrel.
Qatar's energy minister Saad al-Kaabi had in previous week warned that war in the Middle East continuing for "few days" could cause Gulf exporters declaring force majeure, halting deliveries, pushing oil to $150 a barrel and natural gas to $40 per MMBtu within weeks.
Analysts also cited by rupee weakness slipping below the 92‑per‑dollar level and elevated US Treasury yields that drew capital toward safe‑haven assets.
Higher oil prices raise risks of inflation, the current‑account deficit and currency stability which will impact foreign investor sentiment toward emerging markets.
Going forward, analysts said FPIs are unlikely to return as net buyers until there is greater clarity on the geopolitical situation.
On the domestic macro front, economic indicators remained broadly supportive despite global uncertainties.
India's GDP expanded 7.8 per cent in Q3 FY26 under the revised base series, improving from 7.4 per cent a year earlier, while GST collections rose 8.1 per cent year-on-year to over Rs 1.83 lakh crore in February, reflecting steady economic activity. However, industrial momentum moderated, with IIP growth slowing to 4.8 per cent in January from 7.8 per cent in December.
- IANS
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