Foreign Investors Withdraw ₹1.14 Lakh Crore Amid Geopolitical Tensions


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Foreign Investors Withdraw ₹1.14 Lakh Crore Amid Geopolitical Tensions
Foreign Investors Withdraw ₹1.14 Lakh Crore Amid Geopolitical Tensions
In March, foreign institutional investors pulled out ₹1.14 lakh crore from Indian equities, influenced by geopolitical unrest in West Asia.

Foreign institutional investors (FIIs) have recorded significant outflows from Indian equities, selling shares worth ₹1,13,810 crore in March 2026. This sharp sell-off is attributed to heightened geopolitical tensions in West Asia, particularly the ongoing conflict between Iran and Israel.

As per data from the National Securities Depository Limited (NSDL), the total withdrawals by FIIs in 2026 have now reached ₹1.27 lakh crore. The previous monthly record for capital outflows was ₹94,017 crore, set in October 2024.

This month's market activity follows a period of inflow in February, where FIIs had invested ₹22,615 crore, marking the highest monthly investment in 17 months. However, the recent geopolitical developments have dampened market sentiment, leading to sustained selling pressure.

Market experts note that a combination of economic factors, such as rising U.S. bond yields and reduced global liquidity, has made investments in developed markets more appealing, leading to this trend. Himanshu Srivastava, Principal - Manager Research at Morningstar Investment Research India, commented, "The sell-off has been driven by elevated U.S. bond yields and tightening global liquidity, which have improved the attractiveness of developed market fixed income."

Despite market corrections in India, valuations remain high compared to many emerging market counterparts, prompting some investors to engage in profit-taking and reallocating their investments.

The impact of these withdrawals was evident in Indian stock markets, where the benchmark SENSEX fell by 1,690 points or 2.25% to close at 73,583. The NIFTY50 index also dropped by 2.09%, ending at 22,819, marking a consecutive fifth week of decline.

Specific stocks have been notably affected; Shriram Finance fell 5.54%, followed by Tata Motors Private Vehicle segment at 4.92%, Reliance Industries at 4.61%, amongst others. On the other hand, some stocks managed to gain traction, including Oil & Natural Gas Corporation, which rose by 4.03%, and Wipro, which increased by 1.22%.

The market downturn and ongoing international conflicts raise concerns about future investment strategies and market stability across emerging economies worldwide.

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