Relentless FII selling deepens pressure on equities as March outflows cross ₹1.14 lakh crore

Foreign institutional investors have intensified their exit from Indian equities, with net selling in March alone crossing ₹1.14 lakh crore. The cumulative outflow for 2026 has now reached about ₹1.27 lakh crore, underlining a sharp shift in global risk appetite that has weighed heavily on domestic markets.

The selling has been broad-based, but large-cap stocks have borne the brunt, dragging benchmark indices lower and capping any meaningful recovery attempts. Market participants point to a mix of external pressures driving this trend, including elevated crude oil prices, a weakening rupee, and persistent geopolitical tensions in the Middle East.

The scale of these outflows reflects a wider repositioning by global investors away from emerging markets amid uncertainty over inflation trajectories and interest rate outlooks in advanced economies. India, despite relatively strong macro fundamentals, has not been insulated from this shift.

Domestic institutional investors have provided some counterbalance, but their support has been insufficient to fully offset the intensity of foreign selling. As a result, sentiment on Dalal Street remains fragile, with investors increasingly tracking global cues for direction.

In the near term, market behaviour is expected to remain closely tied to movements in oil prices, currency trends, and foreign fund flows. Until there is greater clarity on these fronts, sustained volatility is likely to persist.