Foreign Portfolio Investors Continue 21-Session Selling Spree, Withdraw ₹1.37 Lakh Crore Amid West Asia Tensions

Overseas Investors Continue Selling Spree in Indian Markets

Tensions in West Asia have led to a sustained selling spree by Foreign Portfolio Investors (FPIs) in Indian markets, with a cumulative outflow of ₹19,837 crore in the first two trading sessions of April. This selling streak has extended to 23 consecutive sessions, with a combined outflow of ₹1.37 lakh crore, as per data from the National Securities Depository Limited (NSDL).

The outflows have been significant, with FPIs withdrawing ₹1.17 lakh crore in March alone, marking the highest monthly FPI selling on record. This translates to an average daily outflow of around ₹6,198 crore. The previous largest outflows were recorded in October, when FPIs sold ₹94,017 crore amid rich valuations.

The Indian stock market began 2026 with a fresh wave of optimism after underperforming most of its Asian peers in 2025. However, unexpected tensions in West Asia have created energy disruptions, clouding the near-term outlook. Analysts are not ruling out a resumption of earnings cuts if the situation does not improve.

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The optimism in January was short-lived, as FPIs began selling ₹36,000 crore in the month. However, they turned net buyers in February, pumping in ₹22,615 crore, as corporate earnings showed signs of recovery, easing valuation concerns. Sentiment was also supported by an interim trade deal with the US.

However, the optimism quickly turned cautious following the fallout of the US-Iran war. In addition to global uncertainty, the steady drop in the Indian rupee and a massive jump in crude oil prices have complicated India's external accounts, growth prospects, and inflation expectations.

The massive exodus has caused the Nifty 50 to remain under pressure for the last six straight weeks, falling 11.2%, and it is now 14% off its January peak. Throughout March, the index suffered heavy losses, causing it to plunge 11.3%, marking the biggest monthly drop since March 2020 and extending its losing streak to a fourth straight month.

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The decline is not limited to India but has been felt across global markets. Domestic institutional investors have supported the markets, partially offsetting the impact of FII outflows through consistent buying. However, their support has not been sufficient to fully counterbalance the scale of foreign selling.

Analysts believe that FPI flows are evolving macro factors, with Motilal Oswal AMC's Prateek Agrawal stating that FPIs could return depending on evolving conditions. Agrawal also highlighted that high-growth spaces may drive outcomes, with sustained earnings growth, a slew of trade deals, and a stable currency being key factors.

Rajat Rajgarhia, MD & CEO – Institutional Equities, Motilal Oswal Financial Services, noted that while near-term FII flows may remain subdued, medium- to long-term allocations are expected to improve alongside India's growth trajectory. He further emphasized the need for investors to focus on high-growth sectors and market leaders, with selective opportunities emerging across mid-caps, financials, autos, and new-age themes, while maintaining caution on low-growth segments.