The March carnage has obliterated the previous record of Rs 94,000 crore pulled out in October 2024, with final figures expected to climb even higher after Monday’s plunge in the Sensex and Nifty. Since February 26, two days before the Gulf war erupted on February 28, FIIs have been net sellers on every single trading day.
The relentless exodus has also surpassed January 2025’s Rs 78,027 crore outflow, the June 2022 selloff of Rs 50,203 crore, and even the March 2020 Covid crash that saw Rs 61,897 crore flee the market. In the past month alone, the Nifty has plummeted around 11%, while Nifty Bank has tumbled over 16% and Nifty PSU Bank a devastating 19%.
Also Read | Explained: How RBI’s safety net to protect falling rupee could mean Rs 4,000 crore shock for banks
The weakness in global equity markets following the war in West Asia, the steady depreciation of the rupee, fears of decline in remittances from the Gulf region and concerns surrounding the impact of high crude price on India’s growth and corporate earnings contributed to the sustained selling by FIIs, market analysts noted.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, placed the selloff in global context: “It is important to understand that FPIs were sellers in other emerging markets, too, like Taiwan and South Korea. There is a risk-off trend in equity markets, globally after the war broke out in West Asia.”
But he pointed to a more fundamental problem for India. “The poor returns from India vis a vis other markets – both developed and emerging- during the last eighteen months is the principal reason for FII’s indifference towards India. If their sustained selling strategy is to change, there should be an end to the hostilities in West Asia and decline in crude prices.”Also Read | Goldman downgrades India, slashes Nifty target and warns of earnings cut. Here’s why
The brutal selloff has triggered a wave of downgrades from major global brokerages. Goldman Sachs turned cautious on Indian equities last week, downgrading its stance to “marketweight” and slashing its 12-month Nifty target to 25,900 from 29,300 previously. The US investment bank warned that an “energy-shock-led” earnings downgrade cycle is about to unfold, arguing that higher-for-longer oil prices following tensions around the Strait of Hormuz have meaningfully worsened India’s macro outlook.
The projected return implies “13%/12% returns in INR/USD over the next 12 months for Indian equities (below the 19% USD upside expectation for MXAPJ),” Goldman said. The bank expects earnings growth of just 8% in 2026 and 13% in 2027, while cutting its Nifty fair value to 19.5x from 20.8x previously “as earnings cuts come through.”
Bernstein has also reduced its Nifty year-end target to 26,000 and flagged the risk of the headline index falling to as low as 19,000 in a worst-case scenario.
Nomura delivered an equally grim assessment, slashing its Nifty target for December 2026 to 24,900—a sharp 15% cut from its initial target of 29,300. “The domestic equity inflow growth has slowed down in the recent past. The valuation threshold for FIIs are lower, aggravated by concerns about impact of AI and higher oil prices,” Nomura said recently.
The brokerage drew parallels to the Russia-Ukraine war: “During the Russia-Ukraine war FIIs were net sellers in the secondary market in early 2022 and turned buyers after oil prices stabilised and market valuation bottomed at 16.8x.”
Yet not everyone is in panic mode. Kotak Institutional Equities struck a contrarian note: “We see value emerging in more parts of the market after the sharp correction in prices across caps, sectors and stocks in the past 3-4 weeks due to the ongoing Iran-US conflict. The 8% correction in the broader market and more in several stocks since the start of the Iran-Israel/US war implies a prolonged crisis and a large cut to earnings in perpetuity, which is not correct.”
Still, with the Gulf conflict showing no signs of abating and crude oil prices remaining elevated, the March exodus may be just the beginning of a broader foreign investor retreat from India. The final monthly tally, once fresh data is released, is expected to confirm March 2026 as the darkest month in Dalal Street’s foreign investment history.