New Delhi. Amid rising tensions in West Asia, weakening rupee and rising crude oil prices, foreign portfolio investors (FPIs) have rapidly pulled out their money from the Indian stock market. FPIs have withdrawn Rs 88,180 crore (about $9.6 billion) from the Indian stock market so far in March 2026. In March (till March 20), FPIs remained net sellers on every trading day. This withdrawal is the highest monthly withdrawal so far in March 2026. Financial services (BFSI) stocks, in particular, have seen heavy selling. This huge selloff follows a surge of Rs 22,615 crore in February, which was the highest in 17 months. After the latest selloff, the total FPI outflow so far in 2026 has crossed Rs 1 lakh crore.
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Such a huge withdrawal of money (Rs 88,180 crore) by Foreign Portfolio Investors (FPIs) has deep implications for the Indian economy and stock market. Indiscriminate selling by Foreign Portfolio Investors (FPIs) in the Indian stock market has not only pushed Sensex and Nifty into the red, but has also raised alarm bells for the entire economy of the country.
According to experts, the competition by FPIs to buy US dollars by selling the Indian rupee has led to a huge fall in the value of the rupee, which is directly impacting the rising prices of imported goods. The rising prices of crude oil and the weakening of the rupee are increasing India’s import bill, due to which the burden of inflation on the common man is certain to increase due to rising prices of petrol and diesel and costlier transportation of goods.
This huge withdrawal of foreign exchange has also put the country’s current account deficit (CAD) in a deep crisis, raising concerns about India’s economic stability among global rating agencies. On the other hand, due to increase in production cost of companies dependent on imported raw materials, there is a possibility of a big decline in their profits, which will have a direct impact on their future growth. However, domestic institutional investors (DIIs) like LIC and mutual funds are trying to hold the market, but if this selling by foreign investors continues, a serious situation like ‘free fall’ can arise in the market which can completely wipe out the capital of small investors.
Main reasons for withdrawal:
1. The increasing conflict in the Middle East has created fear among global investors.
2. The rise in crude oil prices has raised concerns about inflation and fiscal deficit in India.
3. The falling rupee against the dollar has affected the returns of foreign investors.
4. Due to rising bond yields in America, investors are also withdrawing money from emerging markets and investing there.
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Report-Sushil Kumar Sah
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