Foreign institutional investors (FIIs) have considerably accelerated their selling activities in the Indian stock market from the beginning of this year, with equities worth Rs 1.04 lakh crore having been sold so far.
More than 50 per cent of 2026’s total outflow happened in March, in which the intensity of the sell-offs increased. FIIs were net sellers in each of the first nine trading sessions of March, withdrawing a total of Rs 56,883 crore, as per the Multibagg.ai, an AI powered stock research and analysis platform.
Investors’ sentiment has been hit due to a number of global challenges such as the US’ new tariff policies and the growing geopolitical tensions in West Asia. Benchmark indices have been under a lot of pressure as a result of these prolonged issues, which has caused a significant market downturn and raised concerns over short-term stability.
While speaking with The Tribune, Amandeep Singh Uberoi, founder & CIO, Creencia Consulting, said the elevated US bond yields, a stronger dollar, and premium valuations in Indian equities had led to profit booking, but the ongoing US–Iran conflict has significantly accelerated risk aversion. The disruption in the Strait of Hormuz, impacting nearly 20 per cent of global oil supply, has pushed crude prices sharply higher, raising inflation concerns and forcing global capital to rotate towards safer assets.
“Going ahead, markets will remain sensitive to geopolitical developments and oil trajectory. While India’s structural growth story remains intact, near-term flows will likely stay volatile until global uncertainty subsides and energy markets stabilise,” he said.
Karan Rijhsinghani, director & head (Product & Advisory), Atom Privé Financial Services, feels that the impact has been visible in equity market volatility, with the Sensex seeing 1,000+ point swings in multiple sessions, and sectoral pressure in IT, financials and oil-sensitive stocks. At a macro level, sustained outflows can also weigh on the rupee and tighten liquidity conditions. However, the domestic cushion is stronger than before. Domestic institutional investors now hold around 18.7 percent of Indian equities, compared to FIIs at 16–17 per cent, which has helped absorb selling pressure.
“Going forward, FII flows will remain highly sensitive to oil prices and US rate expectations. A stabilisation in crude and clarity on the rate cycle could trigger a reversal, but near-term volatility is likely to persist. For India, which imports over 80 percent of its crude, higher oil prices directly impact inflation expectations, currency stability and fiscal balances, prompting foreign investors to reduce exposure to emerging markets. This has translated into heightened volatility in equity markets, especially in rate-sensitive and globally exposed sectors,” Rijhsinghani added.
