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Foreign investors have withdrawn Rs 88,180 crore (about $9.6 billion) from Indian equities so far this month. The special thing is that this is the biggest selling by foreign investors in any month after 17 months i.e. after October 2024. There are still 7 weeks left for the month of March to end. It is possible that foreign investors may break that record also. The main reasons for this are increasing tensions in West Asia, weakening rupee and concerns about the impact of rising crude oil prices on India's growth and corporate earnings. This huge selloff follows a strong surge in February, when foreign portfolio investors (FPIs) invested Rs 22,615 crore. According to NSDL data, this was the highest monthly investment in 17 months. With the recent withdrawals, the total FPI withdrawals so far in 2026 have crossed the Rs 1 lakh crore mark.

Will the 17 month old record be broken?

Following the NSDL data, in March (till March 20), FPIs remained net sellers every trading day, and sold equities worth Rs 88,180 crore in the cash market. However, this withdrawal is still lower than the record monthly withdrawal of Rs 94,017 crore seen in October 2024. Market experts attributed the continued selling pressure to global macroeconomic challenges and increasing geopolitical uncertainty.

Angel One's Senior Fundamental Analyst Waqar Javed Khan said that the main reason for this is the rapid increase in tension in the Middle East. Fears of a prolonged conflict and a possible blockage in the Strait of Hormuz have pushed Brent crude prices above $100 per barrel, creating a 'risk-off' situation in the market.

He further said that this trend has been further increased by many other factors, such as the rupee remaining around the 92 level against the US dollar, rising US bond yields, profit booking after inflows in February, and mixed estimates of fourth quarter earnings, which are indicating pressure on margins in key sectors.

Why is this sale happening?

Himanshu Srivastava, Principal Manager Research, Morningstar Investment Research India, said that the rise in US treasury yields is also another major reason. Rising yields have made dollar-denominated assets more attractive, driving capital away from emerging markets like India. This change is usually accompanied by a strengthening of the dollar and a reduction in global liquidity, further weakening investor confidence in emerging market equities.

Reiterating similar concerns, V.K., Chief Investment Strategist at Geojit Investments. Vijayakumar said that the ongoing conflict in West Asia has further intensified the selling of FPIs. He said that weakness in the global equity market, continuously falling value of rupee and concerns about the impact of high crude oil prices on India's growth and earnings, all these things have had a negative impact on the mood of investors.

Will the situation improve?

Sector wise, financial services suffered the most losses. During the fortnight ending March 15, FPIs sold shares worth Rs 31,831 crore. Talking about the future, analysts expect that the market trend will remain cautious in the coming time. Khan said that due to continuous fluctuations in oil prices or further increase in geopolitical tensions, the process of withdrawal of money from the market may continue.

However, any sign of easing tensions, strong support from domestic institutional investors (DIIs), or a positive surprise in the earnings data could help stabilize the market and promote buying in select stocks. According to Vijayakumar, the investment trend of FPI will change only when geopolitical tensions reduce and stability returns to the entire market.