Iran war ceasefire fails to bring FIIs to India, Rs 2,811 crore sold as caution lingers

Foreign institutional investors (FIIs) remained net sellers in Indian equities on Wednesday, offloading shares worth Rs 2,811 crore, indicating that the recently announced ceasefire in the Iran conflict has not yet been enough to draw foreign money back into the market.

The continued selling extends a persistent trend seen since the outbreak of hostilities in the region. FIIs have sold nearly Rs 1.53 lakh crore over 21 consecutive trading sessions since the Iran war began, reflecting sustained risk aversion toward emerging markets amid geopolitical uncertainty. So far in April, foreign investors have pulled out approximately Rs 38,600 crore, underscoring the cautious stance despite improving global sentiment.

Domestic equity markets, however, staged a sharp rebound after the announcement of a two-week ceasefire between the United States, Israel and Iran, which significantly eased concerns around supply disruptions in global energy markets. The development triggered a steep decline in crude oil prices, with Brent crude falling about 14 percent to below $95 per barrel, boosting investor sentiment across risk assets.

Indian equities mirrored the global rally today, with benchmark indices posting strong gains during the session. The Nifty surged more than 850 points, while the Sensex rose over 2,800 points, gaining roughly 3.8. Broader markets outperformed the benchmarks, with midcap and smallcap indices advancing more than 4.2 percent each, led by strong buying in rate-sensitive sectors such as automobiles and financials, which climbed about 6 percent.

The decline in crude prices is seen as a key positive for the Indian economy, as lower energy costs help ease inflationary pressures, narrow the current account deficit, support the rupee and strengthen fiscal dynamics. These factors typically improve the macroeconomic outlook and support equity valuations, particularly during periods of global volatility.

On the policy front, the Reserve Bank of India maintained the repo rate at 5.25% with a neutral stance, ensuring stable liquidity conditions in the financial system. While concerns around potential inflation-led rate hikes persist, the current pause in monetary tightening continues to provide support to rate-sensitive sectors, including banks, financials, automobiles, capital goods and infrastructure.
Ajay Menon, MD and CEO, Wealth Management at Motilal Oswal, said that with macroeconomic stability largely in place, market attention is now shifting toward corporate earnings performance. He noted that stock and sector differentiation is likely to increase going forward, with markets expected to reward companies that demonstrate strong earnings visibility rather than relying solely on liquidity-driven momentum.Menon added that the near-term outlook for equities remains positive, supported by improving sentiment and stable macro conditions, but the sustainability of the rally will depend on progress in geopolitical negotiations, normalization of energy shipments and the trajectory of crude oil prices, the rupee and foreign investment flows.

Vishnu Kant Upadhyay, AVP – Research at Master Capital Services, said the sharp rally in equities following ceasefire hopes could lead to near-term profit booking after the recent surge. He maintained that the broader trend remains constructive and that investors may consider adopting a buy-on-dips approach as markets consolidate after the strong move.