FPI profile: Foreign investors pull out Rs 52,704 crore in a fortnight as Middle East conflict rattles markets – The Times of India

Foreign portfolio investors (FPIs) turned aggressive sellers in Indian equities in March, pulling out Rs 52,704 crore (around USD 5.73 billion) from the cash market in the first fortnight of the month. The withdrawals come amid escalating tensions in West Asia, the weakening of the rupee and growing concerns over the impact of elevated crude oil prices on India’s economic growth and corporate earnings.According to depository data, FPIs have remained net sellers on every trading day so far in March. Between the beginning of the month and March 13, overseas investors offloaded equities worth about Rs 52,704 crore.The latest round of selling follows a brief revival in foreign inflows in February, when FPIs invested Rs 22,615 crore in Indian equities. That marked the highest monthly inflow recorded in the past 17 months.Before February’s inflow, foreign investors had been consistently pulling money out of the market. They withdrew Rs 35,962 crore in January, Rs 22,611 crore in December and Rs 3,765 crore in November.Analysts say the renewed selling pressure is largely linked to geopolitical uncertainty in West Asia and its impact on energy markets.Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said tensions in the region and concerns about a prolonged conflict affecting the Strait of Hormuz pushed Brent crude prices above $100 per barrel, prompting investors to shift to a risk-off approach. He added that the pressure was intensified by the rupee’s persistent weakness near the Rs 92 level, elevated US bond yields and profit booking following earlier inflows.Similar concerns were highlighted by VK Vijayakumar, Chief Investment Strategist at Geojit Investments. He said the conflict in West Asia has weakened global equity markets, while the falling rupee and rising crude oil prices have raised worries about their potential impact on India’s economic growth and corporate profitability.Vijayakumar also noted that India has delivered comparatively weaker returns than many developed and emerging markets over the past 18 months, which has reduced foreign investors’ interest in the market.He pointed out that markets such as South Korea, Taiwan and China are currently seen as more attractive destinations for investors. According to him, these markets remain relatively cheaper than India even after the recent correction and offer better corporate earnings prospects. As a result, further FPI selling in India may continue in the near term.Despite the heavy outflows, analysts believe the selling has opened up opportunities for domestic investors. The strong FPI exit from financial stocks has made valuations more attractive for local buyers.Looking ahead, Khan said the outlook for the second half of March remains cautious. Outflows could slow if geopolitical tensions ease or if fourth-quarter earnings from sectors such as banking and consumption exceed expectations. However, a further spike in oil prices or fresh global uncertainties could extend the selling trend.Sector-wise, information technology stocks have experienced the largest foreign outflows in 2025 so far. FPIs have withdrawn around Rs 74,700 crore from the IT sector amid subdued revenue growth, tariff-related uncertainties and weaker global spending on technology.Fast-moving consumer goods (FMCG) stocks have also faced significant selling, with outflows of nearly Rs 36,800 crore as urban consumption slows and companies face margin pressures, according to Aditya Shankar, Co-founder of Centricity WealthTech.Power and healthcare sectors have likewise seen notable exits, with FPIs pulling out more than Rs 24,000–26,000 crore, largely due to valuations being stretched relative to earnings delivery.At the same time, FPIs have increased their investments in telecom, oil and gas, metals and chemicals. Shankar said this indicates a rotation by foreign investors towards domestic value segments and commodity-linked sectors.