New Delhi, March 9: In the wake of the ongoing Israel-Iran conflict, foreign portfolio investors (FPI) have withdrawn ₹21,831 crore from the Indian stock market over the past week. This information was released through data provided by the exchanges.
The war has significantly altered the stance of foreign investors. In February, FPIs had invested ₹22,615 crore, marking the largest foreign inflow in the past 17 months.
Prior to February, foreign investors had been net sellers for three consecutive months, with sales of ₹35,962 crore in January, ₹22,611 crore in December, and ₹3,765 crore in November.
However, domestic institutional investors (DII) continued to provide support in March, investing approximately ₹32,786 crore, buoyed by steady SIP flows and long-term domestic participation.
Market experts believe that the recent sell-off in March was driven by escalating geopolitical tensions following attacks on Iran by the U.S. and Israel. Analysts warn that this could disrupt supply through the Strait of Hormuz, pushing Brent crude prices above $90 per barrel.
Last week, Qatar’s Energy Minister Saad al-Kaabi cautioned that if the conflict in the Middle East persists for several days, Gulf countries could declare a state of emergency and halt exports, potentially driving oil prices to $150 per barrel and natural gas prices to $40 per MMBtu.
Analysts also pointed to the weakening rupee and rising U.S. Treasury yields as factors that have drawn capital towards safer investment options.
High oil prices increase risks related to inflation, current account deficits, and currency stability, which could impact foreign investors’ outlook on emerging markets.
Experts suggest that foreign investors are unlikely to return as net buyers until the geopolitical situation stabilizes.
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