FPIs sell Rs 6,434 crore worth of Indian stocks daily in March; what’s next?

Foreign portfolio investors (FPIs) are dumping Indian equities like no tomorrow. With just 12 sessions into March, the institutional class has sold Rs 77,214 crore worth domestic bets, averaging Rs 6,434.50 crore every session, making investors wonder what lies ahead as seven more trading sessions are left in March, excluding public holidays of March 26 and March 31. 

The flows in March has been the worst since Rs 78,027 crore outflows in January 2025. The pace of foreign outflows is such that Rs 90,561 crore outflows in the first three months of 2026 amount to 54 per cent of Rs 1,66,286 crore outflows in the whole calendar 2025. 

FPIs had turned net buyers briefly in February, buying Rs 22,615 crore worth shares, before resuming selling spree. 

"FPI equity flow to India has again turned negative in March (so far) and may remain volatile in the near term, given the heightened geo-political tensions in West Asia," said Antique Stock Broking on March 18.

It, however, sees FPI flow into India normalising after the resolution of US-Iran war, saying Indian equities are now trading at an average premium valuation relative to other emerging and below average relative to developed markets. 

Antique cited broader expectation of corporate earnings recovering in FY26–28 on a low base, low FPI ownership and strong macro-economic fundamentals to believe flows should come back soon. 

Emkay Global in a note this week said an elongated US-Iran battle could leave long-lasting scars for the US and the global economy. First, it will take 2-3 months for global energy supplies to normalise after the war ends, especially if there is damage to infrastructure, Emkay said.

In addition, consumer sentiment will be scarred by the spike in inflation and a 4–6-week disruption could hurt growth for 1-2 quarters, it said.

"Capital flows will be damaged by a global risk-off, even though the Nifty's valuation has collapsed from a premium to a 70 bps discount to the World PER in the current sell-off," it said.  

Jefferies in a note earlier this month said a global rotation amid conviction that the semiconductor cycle has peaked could bring back flows back to India. "If timing the top tick in semiconductor stocks is perhaps the critical market timing issue for global emerging market fund managers this year, it is also clearly critical for an Indian stock market hoping for renewed foreign inflows," Jefferies said. 

Jefferies said, foreign investors are also likely to return to India in case there is a sharp correction in the domestic market triggered by a sudden cessation in domestic mutual fund inflows.