Foreign portfolio investors (FPIs) continued the sell-off in Indian stocks this week, netting Rs 23,801 crore, as global uncertainty and rising crude oil prices continued to dampen investor sentiment.Data released by the National Securities Depository Limited showed that March has already witnessed significant outflows, with foreign institutional investors offloading shares worth Rs 1,17,775 crore, the highest monthly sale recorded so far this year.The ongoing mass migration is largely due to the conflict in the Middle East, which shows no clear signs of abating. The sharp rise in crude oil prices, coupled with the weak rupee, has intensified pressure on domestic markets, prompting foreign investors to reduce their exposure.Market experts noted that a combination of geopolitical tensions, rising energy prices and currency devaluation has created a challenging environment for foreign investments.March witnessed unprecedented selling by FPIs, said VK Vijayakumar, chief investment strategist at Geojit Investments.He said, “March witnessed massive selling by foreign portfolio investors. This is the largest monthly selling ever by foreign portfolio investors. The continuation of the war, the rise in the price of crude oil again to above the US$100 level, the steady decline in the rupee and the rise in the value of the dollar, led to this record selling by foreign portfolio investors.”
He added that the weak rupee was a major factor in accelerating outflows.Vijayakumar noted, “The rupee has depreciated by about 4% since the start of the war, and fears of a further decline have led to a weakening of the rupee, which in turn leads to more selling by foreign investors in financial portfolios.”The rise in crude oil prices above $100 per barrel has also increased concerns about inflation and India’s import bill, given its dependence on imported energy.
This has increased pressure on the rupee and weighed on overall market sentiment.Despite the ongoing selling, experts believe that the market correction has brought valuations to more reasonable levels.“Continuous selling by FDI has made Indian market valuations fair and attractive in some sectors. But FDI inflows can happen only when there is de-escalation on the war front leading to lower crude oil,” Vijayakumar added.The continuing trend suggests that foreign investor activity in Indian markets is currently shaped by global developments, especially geopolitical tensions and energy price movements, and any reversal in flows is likely to depend on mitigating these risks.