Foreign Investors Withdraw Record $12.3 Billion From Indian Equities
Foreign investors withdrew a record $12.3 billion from Indian stocks in March 2026 as war between the U.S., Israel, and Iran drove oil prices higher.
Indian stock markets experienced their worst monthly performance in six years during March 2026, with the Nifty 50 and Sensex both declining approximately 10.5%. The slump was driven by a record exodus of foreign portfolio investors, who withdrew Rs 1.14 trillion (approximately $12.3 billion) from domestic equities. This retreat followed five consecutive weeks of losses, fueled by a global risk-off sentiment and surging energy costs.
Foreign portfolio investors offloaded assets as a war involving the United States, Israel, and Iran entered its fifth week. The conflict, which began February 28, escalated with Iranian attacks on an Israeli chemical facility, retaliatory Israeli strikes on Tehran, and missile attacks on Israel by Yemen-based Houthis. These developments pushed Brent crude oil prices above $116 per barrel and weakened the Indian rupee past 94 against the US dollar.
Financial institutions including Goldman Sachs, Morgan Stanley, and UBS Global Wealth Management lowered their expectations for Indian stocks, citing threats of stagflation. Market volatility remained at a four-year high as investors reacted to potential disruptions in the Strait of Hormuz and comments from U.S. President Donald Trump regarding military action against Iranian energy infrastructure. While domestic institutional investors provided some support by injecting over $13 billion, the overall outlook remained grim amid ongoing ceasefire negotiations and maritime traffic disruptions.
