Foreign institutional investors (FIIs) sold Indian equities worth a steep Rs 1,13,810 crore in March 2024, marking the worst monthly outflow so far this year and extending a sustained selling trend. This brings total FII disinvestment for the year to Rs 1,27,157 crore.
The selling is largely attributed to a global “risk-off” sentiment following the Iran-Israel conflict, coupled with specific domestic concerns. Chief Investment Strategist Dr. VK Vijayakumar identified key factors: weakness in global markets, the rupee’s steady depreciation, fears of reduced Gulf remittances, and high crude oil prices threatening India’s growth and corporate earnings. He emphasized that FIIs are also selling other emerging markets like Taiwan and South Korea. Crucially, he noted that India’s relatively poor returns over the last 18 months compared to global and emerging markets are the principal reason for FII indifference. A reversal in FII flows would require an end to West Asian hostilities and a decline in crude prices.
Consequently, Indian indices fell sharply. On the day referenced, the Nifty dropped 2.09% (486.85 points) to 22,819.60, and the BSE Sensex fell 2.25% (1,690.23 points) to 73,583.22, dragged down by financials, autos, and consumer stocks. While FIIs turned net buyers in February 2024 (Rs 22,615 crore), the overall 2024 trend remains bearish, continuing a patchy and net-selling pattern from 2025 where they withdrew Rs 1,66,286 crore amid trade deal delays and premium valuations.