Record Outflows From Indian Equities By Foreign Institutional Investors in March 2026

Foreign Institutional Investors (FIIs) have withdrawn from Indian equities at an unprecedented rate in March 2026, with the month witnessing the highest-ever monthly outflows from Indian equities. This is due to escalating global risk aversion amid the West Asia conflict.

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According to Bloomberg data, FIIs have sold equities amounting to $11.7 billion (equivalent to ₹97,000 crore) until March 25, 2026. March is likely to be recorded as the worst month in terms of foreign investor outflows from Indian equities. The total outflows in 2026 have already surpassed $13 billion (equivalent to ₹1.08 lakh crore), close to what was seen in the previous year.

Selling Pressure Driven By Global And Domestic Factors

This sustained selling is occurring in an environment of both local and international factors. 
 An increase in crude oil prices, due to disturbances in the Middle East, has had a significant effect on India, as it imports oil. The prices of Brent crude oil touched $110 a barrel or more during the month.

At the same time, the Indian rupee weakened sharply, touching record lows near 94.8 against the U.S. dollar in March, according to market data. The currency decline, coupled with elevated global uncertainty, contributed to the withdrawal of foreign capital.

Data from Bloomberg also showed that global funds pulled approximately $52 billion from emerging Asian equities, excluding China, since the start of the Iran conflict, indicating a broader risk-off trend across the region.

Domestic Investors Cushion Outflows

In spite of the high selling pressure seen from FIIs, the markets received some support from the domestic institutional investors (DIIs). Bloomberg data shows that the DIIs invested more than $13 billion (equivalent to ₹1.08 lakh crore) in equities in March 2026.

The markets are still not recovering from the continuous pressure seen in the benchmark indices throughout the month. Volatility is still seen in the markets due to the uncertainty prevailing in the global markets.

Continued Volatility In Equity Markets

Indicators of market volatility have continued at high levels. India’s volatility index recorded multi-year highs in March. This is due to continued uncertainty among investors because of geopolitical events and movements in commodity prices.

Over the past two years, cumulative foreign outflows from Indian equities have exceeded $34 billion, according to Bloomberg data. This period has also seen Indian equities lag behind those of the rest of the region.

The large outflows experienced in March 2026 highlight the effects of international geopolitical tensions and increasing energy prices on capital flows, with foreigners remaining net sellers of risk assets in search of safe havens.