FPIs Open March with Largest Daily Pullout in Four Months
Agencies report that in February, Foreign Portfolio Investors (FPIs) recorded a total net inflow of $2.5 billion (₹22,615 crore), encompassing both primary and secondary markets. However, on March 2, FPIs executed the largest daily outflow in four months, totaling $751.4 million (₹6,832 crore), indicating a significant shift in market sentiment.
February’s Strong Inflow vs. March’s Outflow
– FPIs had invested $2.2 billion (₹19,782 crore) into secondary equities in February, marking the strongest inflow in 17 months.
– The recent outflow is concerning, particularly given the geopolitical tensions that have arisen, particularly in the Middle East, instigating a risk-off sentiment that may continue until resolution is achieved.
Historical Context of FPIs’ Trading Patterns
– Prior significant sell-offs occurred on September 1 and November 3 last year, where FPIs pulled out $1 billion and $857.2 million, respectively.
– Following three months of being net sellers up to January 2026, FPIs showed renewed interest in Indian equities in February, spurred by expectations of improvement in international trade relations.
Concerns Over Sustainability of Foreign Funds
The substantial outflow on March 2 raises questions about the sustainability of foreign fund flows in the short term. The ongoing geopolitical conflicts are likely to influence global energy prices, which, in turn, could have adverse effects on India’s economy—especially as a net energy importer.
FPIs Selling Trends Amid Rising Risks
– Over six out of the eleven months in FY26, FPIs were net sellers, reflecting their cautious outlook on Indian equities, particularly given relatively high valuations compared to other emerging markets.
– Despite this selling trend, the outflows were significantly more subdued compared to the previous fiscal year, with FPIs selling nearly $7 billion of equities from April 2025 to February 2026, about half of the $14.2 billion sold during the same period the previous year.
Cautious Approach to Primary Markets
Additionally, FPIs reduced their investment in the primary market to $7.6 billion, down from the previous year’s figures. This indicates a more reserved approach to initial public offerings (IPOs) and qualified institutional placements (QIPs).
Conclusion
The latest movements by FPIs, particularly the largest daily outflow in four months, reflect a growing concern over global economic stability amid geopolitical tensions. Investors will need to closely monitor these trends to gauge the ongoing viability of foreign investments in Indian markets. As these events unfold, clarity on regional conflicts will be crucial for restoring confidence among FPIs and ensuring sustained investment in India’s equity landscape.