Synopsis: Foreign Portfolio Investors pulled out a record Rs. 1.14 lakh crore from Indian equities in March 2026, the largest single-month outflow in the history of Indian capital markets as the West Asia conflict, a rupee near 94-per-dollar, and crude oil above $100 per barrel converged into a perfect storm of emerging market risk aversion.
Indian equity markets absorbed their worst month of foreign selling on record in March 2026, with FPIs offloading equities worth Rs. 1,17,775 crore during the month, the highest level of monthly selling ever recorded. This surpassed the previous peak of Rs. 94,017 crore seen in October 2024, and came almost entirely from secondary market selling.
FPIs were net sellers on every single one of the 17 trading sessions during the month, a rare occurrence pointing to deep-seated risk aversion rather than routine profit-taking. The selling has continued into April: FPIs sold nearly Rs. 30,000 crore in just the first three trading days of April.
The primary catalyst was geopolitical. The US and Israel’s war against Iran sent crude oil prices significantly higher, with disruptions to the movement of oil tankers from the Strait of Hormuz, a critical sea route through which one-fifth of the world’s oil passes. For India, which imports over 85 percent of its crude requirements, a surge in crude oil prices to nearly $120 per barrel raised significant concerns over inflation and the country’s import bill.
The currency channel amplified the damage. The Indian rupee weakened to a record 94.78 level against the US dollar, with the USD/INR pair surging over 4 percent since the Iran war began. VK Vijayakumar of Geojit Investments described the dynamic precisely: “Rupee depreciated by about 4 percent since the war began and fears of further depreciation added to the weakness of the rupee, which, in turn, triggered further selling by FPIs.” For a foreign fund measuring returns in dollars, a 3 percent gain in the Nifty could be entirely wiped out by a 4 percent depreciation in currency, resulting in a net loss. That arithmetic drove the consistency of the selling.
Rising US Treasury yields above 4.8 percent added a third layer of pressure, making dollar-denominated safe-haven assets more attractive relative to emerging market equities at a time when geopolitical risk was already elevated.
FPI outflows for FY26 as a whole reached nearly Rs. 1.8 trillion, the highest since 1992, with net outflows surging 42 percent year-on-year. March outflows alone accounted for nearly 90 percent of the total FPI outflows for the year 2026 up to that point. The negative sentiment extended beyond equities: debt outflows of roughly Rs. 7,566 crore in early March showed that foreign investors were reducing exposure across Indian financial assets, not just trimming stock positions.
Benchmark indices reflected the pressure. The BSE Sensex fell to 81,537 and the Nifty 50 settled at 25,048, marking a month-to-date decline of 4 percent for both indices. Since the beginning of the Iran war, the Sensex and Nifty 50 have declined 9.50 percent and 9.37 percent respectively, with the Nifty Midcap 100 and Nifty Smallcap 100 also falling 8.50 percent and 7.73 per cent.
Domestic Institutional Investors, powered by strong retail participation, acted as a powerful counterbalancing force. SIP inflows remained robust, consistently crossing Rs. 30,000 crore per month, and SIP AUM reached a record Rs. 16.64 lakh crore in February 2026. For the first time, domestic ownership of Indian companies surpassed that of overseas investors in March. Without this domestic absorption, the index decline would almost certainly have been steeper.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post ₹1.14 Lakh Cr Wiped: FPIs Sell Indian Equities at Unprecedented Pace in March 2026 appeared first on Trade Brains.