FPI Assets Drop ₹10 Lakh Crore In March As Iran-U.S. Conflict Weighs On Markets

The decline in FPI assets in India amounted to almost ₹10 lakh crore in March 2026. According to data released by depositories, total FPI assets under custody (AUC) declined to ₹62.46 lakh crore as of March 31, 2026, compared with ₹72 lakh crore at the end of February, marking a 13% fall. The March figure represents the lowest level in the past 24 months.

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Market Correction And Heavy Selling

The decline in FPI portfolio value coincided with a broad-based correction in Indian equity markets during March. Benchmark indices fell by over 11% during the month amid a global sell-off. Mid-cap and small-cap stocks witnessed sharper declines, with several stocks falling up to 20% over the same period.

Depository data showed that FPIs were net sellers in March, offloading shares worth ₹1.17 lakh crore. The drop in AUC reflects both equity outflows and the fall in stock prices during the period.

Country-Wise Decline In Holdings

U.S.-based funds recorded the largest decline in absolute terms. The value of their holdings fell by ₹4 lakh crore, from ₹31.5 lakh crore in February to ₹27.5 lakh crore in March. The United States continues to be the biggest foreign investor in FPIs in India, contributing to over one-third of all investments.

As a percentage, the decrease was higher in Singapore and Luxembourg. In Singapore, the AUC fell to about 15%, reducing from ₹4.7 lakh crore to ₹4 lakh crore. Similarly, in Luxembourg, the investment dropped from ₹5.27 lakh crore to ₹4.5 lakh crore, again, a 15% reduction.

Impact on Investors

There was a drop in portfolio valuation among various investor classes. The sovereign wealth fund assets fell from ₹4.9 lakh crore in February to ₹4.3 lakh crore in March, which means that there was a reduction of about 10%. 

Holdings of foreign central banks also declined by over 15%, from ₹1.58 lakh crore to ₹1.34 lakh crore during the same period.

Volatility Continues Amid Geopolitical Uncertainty

Volatility was still high for the month because of geopolitics in West Asia and the possibility of disruption in energy supply around the world.

The Indian markets were buoyant after news of a ceasefire between the U.S. and Iran, with the Sensex and Nifty rising by 3.9% in one trading day. But markets still remain sensitive to developments, with indices falling again on other trading days.

The large fall in FPI holdings of stocks in March shows how global risks affect the flow of foreign money into India and the valuation of equities in India.