FPIs dump Rs 31,831 crore in financials as total outflows hit Rs 52,703 crore in a fortnight

Foreign portfolio investors (FPIs) continued their selling spree in Indian equities, pulling out Rs 52,703 crore in the fortnight ended March 15, underscoring a sharp risk-off sentiment amid global uncertainties and rising macro headwinds. The worst sufferer was the financial sector, which saw Rs 31,831 crore worth of FII exodus in this period.

The selling has been broad-based across sectors, with rate-sensitive and heavyweight segments witnessing the sharpest outflows, while only a handful of sectors managed to attract selective buying.

The rate-sensitive automotive sector, whose prospects are closely tied to energy and metal prices, is the next in line with outflows of Rs 4,807 crore in the period between March 1 and March 15.

Telecommunications, construction and oil & gas witnessed outflows of Rs 3,856 crore, Rs 2,975 crore and Rs 2,932 crore, respectively.

Defensive and consumption-oriented pockets were not spared either, with healthcare recording a sell-off worth Rs 2,436 crore, followed by Rs 2,403 crore and Rs 2,133 crore in FMCG and realty, respectively.

Additionally, sectors such as consumer durables, construction materials, services and IT also saw notable outflows, indicating a broad-based withdrawal of foreign capital. Even smaller segments like media, utilities and textiles witnessed marginal selling.

Read more: Nifty Bank logs 3rd-worst March fall since the global financial crisis. HDFC Bank, SBI among top culprits

Sectoral inflows

The scale of outflows from financials highlights their heavy FPI ownership and sensitivity to global risk aversion, making them the primary target during periods of uncertainty.

Amid the widespread sell-off, select sectors managed to attract FPI inflows, led by capital goods, which cornered investments to the tune of Rs 3,897 crore. The metals & mining vertical received Rs 876 crore of flows. The next in line were power, consumer services and chemicals, which received Rs 602 crore, Rs 531 crore and Rs 225 crore, respectively.

The buying in capital goods and metals suggests continued interest in domestic capex and infrastructure themes, even as broader market sentiment remains weak.

After a February pause, FII continued their selling trend in March, with month-to-date equity outflows at Rs 88,180 crore. They have already offloaded domestic shares worth Rs 1,01,527 crore in 2026. In February, inflows of Rs 22,615 crore were reported, along with a sell-off of Rs 35,962 crore in January.

Markets in March

Seasonally a strong month, March this time was hit by the Iran-Israel war that started on February 28. The impact is evident, with the Nifty down by over 8% or 2,064 points in the last three weeks.

As energy prices spike, global markets now fear inflation returning. Brent, which is up by over 40% this year, is hovering near the $109 a barrel mark and may surge to $150-200 a barrel if the war continues and the Strait of Hormuz remains shut.

The March sell-off has been broad-based, dragging down most sectoral indices. But financials have turned out to be the biggest underperformer. The Nifty PSU Bank index has been the worst hit, tumbling 14.36%, followed by the Nifty Auto index and Nifty Bank, which have declined 12% each.

The Nifty Bank index is headed for its third-worst March performance in two decades, underscoring the intensity of the ongoing market correction, with banking stocks emerging as one of the biggest casualties. As of March 19, the index was down around 12% for the month, placing it among the steepest declines for the banking gauge, surpassed only by the pandemic-driven crash of 2020 (-34%) and the global financial crisis period in 2008 (-23%).

Defensive and consumption-oriented segments have also come under pressure, with the Nifty FMCG, Nifty Metals and Nifty Consumer indices declining around 8% each. Meanwhile, the Nifty IT and Nifty Media indices have slipped 7%, while relatively resilient pockets such as the Nifty Healthcare, Nifty Pharma and Nifty India Defence have contained losses to 4-5%, indicating some stability amid the broader risk-off mood.

FII/FPI outlook

“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 prices on India’s growth and corporate earnings contributed to the concern of FPIs,” Dr V K Vijayakumar, Chief Investment Strategist, Geojit Investments, said.

The poor market returns from India vis-à-vis other markets (both developed and emerging) during the last eighteen months is the principal reason for FPIs’ indifference towards India, he said, adding that if their sustained selling strategy is to change, there should be clear indications of earnings recovery in India.

The Geojit analyst said FPIs now regard South Korea, Taiwan and China as better markets to invest in since they are relatively cheaper than India even after the recent correction. “Also, the corporate earnings prospects in these markets appear better than that of India. Therefore, further selling by FPIs in India is likely in the short term. In the present uncertain context, this will take time,” the analyst said.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)