In the first fortnight of March, foreign investors pulled out Rs 52,704 crore (about $5.73 billion) from domestic equities amid rising tensions in West Asia, a depreciating rupee, and concerns over the impact of higher crude prices on India’s growth and corporate earnings. The special thing is that this is the biggest sale in the last 13 months. Last time in January 2025, foreign investors had sold more than Rs 70 thousand crore. After that such selling has been seen now. The special thing is that the second fortnight of the month has yet to begin. In such a situation, it is expected that if the war continues in the Middle East and a decline is seen in the stock market, then this figure can go beyond Rs 70 thousand crores. Let us also tell you what kind of figures have come out regarding the selling by foreign investors.
Record selling by foreign investors
According to NSDL data, in the first fortnight of March, foreign investors have withdrawn Rs 52,704 crore (about $ 5.73 billion) from the Indian stock market. This latest selloff comes as foreign portfolio investors (FPIs) invested Rs 22,615 crore in Indian equities in February, the highest monthly inflow in 17 months. Before that, FPIs had been net sellers for three consecutive months. According to depository data, they had withdrawn Rs 35,962 crore in January, Rs 22,611 crore in December and Rs 3,765 crore in November. The special thing is that it is believed to be the biggest sell-off by foreign investors after January 2025. Then foreign investors had sold Rs 78,027 crore from the market.
Why was selling seen?
Market experts attributed the main reason for this withdrawal to the increasing geopolitical tension in West Asia. Waqar Javed Khan, senior fundamental analyst at Angel One, said that rising tensions in the region and the fear of the Strait of Hormuz being disrupted by a prolonged conflict pushed Brent crude above $100 a barrel, leading to a ‘risk-off’ move. This was further added to by the continued weakness of the rupee (which was close to Rs 92), rise in US bond yields and profit-booking on earlier investments.
VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said weakness in global equities following the conflict in West Asia, rupee depreciation, and concerns over the impact of higher crude oil prices on India’s growth and corporate earnings have weighed on FPI sentiment.
He further said that FPIs have shown indifference towards investing in India due to weak returns from India compared to developed and emerging markets in the last 18 months. According to him, South Korea, Taiwan and China are being considered more attractive markets at the moment because even after recent reforms, they are still cheaper than India and have better corporate earning potential. Therefore, there is a possibility of further selling by FPIs in India in the short term.
What is positive sign?
The positive sign is that due to heavy selling by FPIs in financial stocks, valuations of shares have become attractive for domestic investors. For the second fortnight of March, Khan said the outlook remains cautious. If geopolitical tensions ease or if Q4 earnings from banking and consumption sectors are better than expected, outflows may ease. However, any further rise in oil prices or renewed global uncertainty could increase selling pressure.
Money withdrawn from IT sector
If seen sector-wise, the highest outflow has been seen in the IT sector so far in 2025. FPIs have pulled out around Rs 74,700 crore due to weak revenue growth, tariff uncertainty and decline in global tech spending. Aditya Shankar, co-founder of Centricity Wealthtech, said that after this there was an outflow of about Rs 36,800 crore in the FMCG sector, due to slowdown in urban consumption and pressure on margins.
Heavy selling was also seen in power and healthcare sectors, with outflow of more than Rs 24,000-26,000 crore. The main reason for this was the valuation being higher than the earnings. He further said that meanwhile, FPIs have increased their investments in telecom, oil and gas, metals and chemicals sectors, indicating a shift towards domestic value and commodity-linked investments.