FPIs reduced their investment further in FMCG companies with the outflow increasing to ₹3,016 crore (₹2,403 crore), the data showed.

Foreign portfolio investors (FPIs) continued selling heavily in financial services in March, touching a record level of ₹60,655 crore, though the selling moderated in the second fortnight to ₹28,824 crore, compared to ₹31,831 crore in the first fortnight, according to NSDL data released on Tuesday.

The pace of FPIs selling in automobile and realty sectors intensified in the second fortnight with outflows of ₹7,691 crore and ₹2,560 crore respectively compared to ₹4,807 crore and ₹2,133 crore logged in the first fortnight of March.

However, selling by FPIs almost halved in IT stocks at ₹611 crore (₹1,263 crore). The outflow from construction and consumer services sectors also increased multi-fold to ₹6,179 crore (₹2,975 crore) and ₹2,672 crore (₹531 crore).

FPIs reduced their investment further in FMCG companies with the outflow increasing to ₹3,016 crore (₹2,403 crore), the data showed.

US-Iran war impact

Abhishek Saraf, Lead Equity Strategist, Motilal Oswal Financial Services, said FPIs flows have been volatile while they turned positive in February with $1.7 billion of inflows, the onset of the Iran war sparked another bout of massive selling of $14.2 billion in March, taking the outflows to $15.8 billion in 2026.

Once the war dust settles, there is a high likelihood of a better FPI flow environment and even an abatement in outflows will be taken positively by the market, while full-blown positive flows can lead to sharper rallies, he added.

After a recent correction of 10 per cent since the start of the war in West Asia, valuations have become much more sober with the Nifty trading at 18 times (a 14 per cent discount to the Long period average of 20.9 times).

The Indian market has dipped 3 per cent, while the MSCI EM has risen 31 per cent, resulting in an underperformance of 34 per cent in FY26. This is the most severe underperformance over the last two decades. The Indian market’s valuation premium versus Emerging Markets have shrunk to 27 per cent against a 10-year average of 73 per cent, said Motilal Oswal Financial Services.

Assets dip

The asset under custody (AUC) of FPIs have plunged 16 per cent to ₹62.46 lakh crore as of March-end against ₹74.76 lakh crore in December-end.

AUC of IT and financial services dipped 27 per cent and 21 per cent to ₹3.92 lakh crore (₹5.38 lakh crore) and ₹19.04 lakh crore (₹23.89 lakh crore).

Published on April 7, 2026