sold Indian equities and debt aggressively across all four reporting sessions this week, driven by escalating geopolitical tensions in West Asia, a depreciating , and sustained risk-off sentiment globally, NSDL data showed.
On March 16, FPIs recorded the steepest single-session net outflow of the week, with a total net investment of negative ₹12,462.74 crore across all asset classes. Equity alone accounted for a net outflow of ₹10,827.45 crore, while debt instruments including FAR and VRR categories added to the selling pressure with net outflows of ₹1,494.06 crore and ₹134.48 crore, respectively.
The selling continued on March 17, with total net outflows at ₹10,018.31 crore. Equity sales drove the session with a net outflow of ₹9,406.78 crore. Debt-VRR saw a net outflow of ₹790.18 crore and Debt-FAR recorded ₹860.03 crore in net sales, partially offset by a net inflow of ₹1,066.89 crore in the Debt-General Limit category.
On March 18, total net outflows moderated to ₹7,801.30 crore. Equity net outflows stood at ₹4,276.02 crore. However, Debt-FAR remained under heavy pressure with net sales of ₹1,817.75 crore, and Debt-VRR recorded net outflows of ₹1,146.90 crore. Mutual fund schemes also posted a net outflow of ₹777.77 crore on the day.
The March 20 reporting date — which captures trades from March 18 and 19 — saw the highest total net outflow of the week at ₹13,415.18 crore. Equity net outflows stood at ₹10,965.74 crore, while Debt-FAR recorded net sales of ₹2,169.73 crore. Debt-General Limit swung to a net outflow of ₹288.24 crore, reversing the inflows seen earlier in the week. The Hybrid segment was among the few categories to record a net inflow, at ₹117.05 crore.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed to the West Asia conflict as the primary trigger. “The war in West Asia has aggravated the selling by FPIs. The volume and intensity of FPI selling increased in recent days when the conflict escalated. FPIs were net sellers on all trading days in March,” he said, citing NSDL data.
Vijayakumar identified structural reasons behind the sustained outflows beyond the immediate conflict. “The weakness in global equity markets following the war in West Asia, the steady depreciation of the rupee and concerns surrounding the impact of high crude price on India’s growth and corporate earnings contributed to the concern of FPIs.” He added that poor returns from India relative to both developed and emerging markets over the past eighteen months remained the principal driver of FPI indifference.
Indiscriminate selling
The selling was also notable for its indiscriminate nature. “FPIs sold financial services stocks for ₹31,831 crore [in the fortnight ending March 15]. Financial services are doing well and their valuations are fair. Despite this, FPIs sold massively in this sector because this sector accounts for about 32 per cent of the Assets Under Custody of the FPIs. The sector has liquidity and it is easy to sell and exit,” Vijayakumar said.
Bruce Keith, CEO and Co-founder of InvestorAi, offered a broader perspective. “The FII outflows are not a reflection of the long term Indian growth story but merely a relative measure of short term risk,” he said, noting that currency depreciation makes it harder for overseas investors to benefit from earnings growth in dollar terms, while geopolitical uncertainty is pushing international investors toward safer, closer-to-home havens.
Vijayakumar said a reversal in FPI flows hinges on one condition. “A reversal of the FPI selling will happen only when the war ends and normalcy returns to the market.”