MUMBAI: Net FDI turnover on Indian bourses reached around Rs 54,455 crore ($5.9 billion) by March 13, 2026, as global risk sentiment turned negative after a brief rebound in foreign inflows earlier in the year.The earlier improvement in flows followed the India-US tariff agreement, which reduced tariffs on Indian exports to the US and improved investor sentiment towards India’s growth and export outlook. February saw strong foreign buying in stocks, as market corrections and resilient corporate earnings supported investor confidence.“Weakness in global equity markets following the war in West Asia, the steady depreciation of the rupee and concerns surrounding the impact of rising crude oil prices on India’s growth and corporate earnings have contributed to concerns among foreign portfolio investors.
The weak returns from India compared to other markets – both developed and emerging – over the past 18 months are the main reason for FPI’s apathy towards India.
If the sustainable selling strategy is to change, there must be clear signs of a recovery in profits in India. “In the current uncertain context, this will take some time,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
Geopolitical tensions escalated after US-Israeli strikes on Iran at the end of February, sparking a global risk-off movement. Foreign investors began unwinding their positions in Indian stocks soon after the conflict intensified. The escalation also led to outflows from fully accessible government bonds in India, as investors reassessed risks in emerging markets.“Now FPIs in South Korea, Taiwan and China are considered better markets to invest as they are relatively cheaper than India even after the recent correction.
The earnings outlook for companies in these markets also looks better than in India. Therefore, more selling by foreign institutional investors in India is likely in the short term. “On the positive side, the massive sell-off by foreign institutional investors in the financial sector has made their valuations attractive and investable for domestic investors,” Vijayakumar added.Investors cited risks of rising crude oil prices, pressure on the rupee, and rising bond yields as key concerns.
The sell-off mirrored the improved flows seen earlier in the year.Domestic institutional investors absorbed much of the selling, which helped limit broader declines in stock markets.The outflows reflect portfolio de-risking and reassessment of external risks and not a structural change in India’s growth outlook.