Kamal Ghorui
Mumbai: Net FPI selling on Indian exchanges reached around Rs 54,455 crore ($5.9 bn) by 13 Mar 2026 as global risk sentiment turned negative after a brief recovery in foreign flows earlier in the year.The earlier improvement in flows followed the India–US tariff deal, which reduced tariffs on Indian exports to the US and improved investor sentiment toward India’s growth and export outlook. February saw strong foreign buying in equities as market corrections and resilient corporate earnings supported investor confidence.“The weakness in global equity markets following the war in West Asia, the steady depreciation of the rupee and concerns surrounding the impact of high crude price on India’s growth and corporate earnings contributed to the concern of FPIs. The poor returns from India vis a vis other markets – both developed and emerging- during the last eighteen months is the principal reason for FPI’s indifference towards India. If their sustained selling strategy is to change, there should be clear indications of earnings recovery in India. In the present uncertain context, this will take time,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.Geopolitical tensions escalated after US–Israel strikes on Iran at the end of Feb, triggering a global risk-off move. Foreign investors began unwinding positions in Indian equities soon after the conflict intensified. The escalation also triggered outflows from India’s fully accessible Govt bond route as investors reassessed risks in emerging markets.“Now FPIs regard South Korea, Taiwan and China as better markets to invest since they are relatively cheaper than India even after the recent correction. Also, the corporate earnings prospects in these markets appear better than that of India. Therefore, further selling by FPIs in India is likely in the short term. On the positive side, huge selling by FPIs in financials has made their valuations attractive and investable for domestic investors,” added Vijayakumar.Investors cited the risk of higher crude oil prices, pressure on the rupee, and rising bond yields as key concerns. The selling reversed improving flows seen earlier in the year.Domestic institutional investors absorbed much of the selling, which helped limit broader declines in equity markets.The outflows reflect portfolio de-risking and a reassessment of external risks rather than a structural change in India’s growth outlook.
