Indian equity markets in March saw foreign investors pulling out Rs 1.14 lakh crore, making it the highest monthly outflow on record. The sharp withdrawal has been largely attributed to rising tensions in the Middle East, pressure on rupee, and growing concerns over how elevated crude oil prices could weigh on the country’s growth.With just one more trading session left in the month, the final tally might climb further. The previous peak for monthly outflows was Rs 94,017 crore in October 2024.Data from NSDL shows that total outflows by foreign portfolio investors (FPIs) have reached Rs 1.27 lakh crore so far in 2026. The selling trend has been consistent through March, with FPIs offloading equities worth Rs 1,13,380 crore in the cash segment up to March 27.This marks a sharp turnaround from February, when FPIs had infused Rs 22,615 crore into equities — the highest monthly inflow recorded in 17 months.The ongoing sell-off is being linked to a combination of global economic pressures and geopolitical uncertainty. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the weakness in global equity markets following the war in West Asia, the steady depreciation of the rupee, fears of decline in remittances from the Gulf region and concerns surrounding the impact of high crude prices on India’s growth and corporate earnings contributed to the sustained selling by FPIs.Himanshu Srivastava, Principal, Manager Research at Morningstar Investment Research India, pointed to additional factors driving the trend. He said the selling has been driven by a combination of elevated US bond yields and tightening global liquidity, which have improved the relative attractiveness of developed market fixed income.He added that even though Indian equity valuations have moderated with the recent market fall, they continue to be relatively high compared to several emerging market peers, leading to selective profit booking and reallocation.The trend is not confined to India. FPIs have also been sellers in other emerging markets such as Taiwan and South Korea, amid a broader shift towards risk aversion in global equity markets following the outbreak of war in West Asia.
