Foreign Investors Withdraw ₹12,000 Crore from Indian Markets Amid Escalating US-Iran Tensions

Foreign Institutional Investors (FIIs) Unload ₹12,048.29 Crore in Indian Equities

In the first two trading days of March, FIIs sold off shares worth ₹12,048.29 crore in the cash market, driven by increasing tensions in West Asia. On Wednesday, March 4, FIIs offloaded equities worth ₹8,752.65 crore, while Domestic Institutional Investors (DIIs) purchased stocks worth ₹12,068.17 crore.

Quarterly Trends FIIs have remained net sellers in Indian equities throughout the first quarter of 2026, paralleling declines in the Nifty 50 benchmark index. In February 2026, FIIs sold off ₹6,640.78 crore, resulting in the index finishing at 25,178.65, a decrease of 0.6%. The sell-off was even more pronounced in January 2026, marked by outflows of ₹41,435.22 crore, as the benchmark closed at 25,320.65, down 3.1% for the month.

Crude Oil Impact on FIIs Experts opine that FIIs are likely to hold off on making sustained investments in India until there is more clarity regarding the geopolitical situation. Specifically, crude prices need to decrease if India aims to attract more investment from FIIs. Elevated import expenses, inflationary pressures, and depreciation of the rupee are major concerns due to India's reliance on imports for 80-85% of its oil needs.

Read also: Expert Portfolio Manager Raja Venkatraman Names Top Investment Picks for June 4

Crude Oil Prices On Thursday, crude oil prices rose more than 3%, continuing a rally as the intensifying US-Israeli conflict with Iran heightened concerns about potential extended disruptions to essential oil and gas supplies from the Middle East. Brent crude increased by $2.44, or 3%, reaching $83.84 per barrel, while US West Texas Intermediate crude climbed $2.44, or 3.27%, to $77.10.

Market Reaction The recent selling by FIIs, amounting to over ₹12,000 crore in the first two trading sessions of March, reflects a classic risk-off response to rising geopolitical tensions. Sudeep Shah of SBI Securities explained that historically, during periods of global uncertainty, FIIs tend to reduce exposure to emerging markets like India and seek safety towards safer assets such as the US dollar & Gold.

Key Statistics

• Total FII outflows: ₹12,048.29 crore
• FII outflows on March 4: ₹8,752.65 crore
• DII purchases on March 4: ₹12,068.17 crore
• Nifty 50 benchmark index: 25,178.65 (February 2026)
• Crude oil prices: Brent crude at $83.84 per barrel, US West Texas Intermediate crude at $77.10

Read also: MarketSmith India's 4 June Stock Recommendations