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21-03-2026
Bureau Report
NEW DELHI: Foreign selling in Indian equities surged in the first half of March, led by financials, marking the heaviest fortnightly selling in 17 months and dragging the Nifty 50 to its worst fortnight since the COVID-19-led rout in March 2020.
Foreign portfolio investors’ offloaded stocks worth 527.04 billion rupees ($5.65 billion), data from the National Securities Depository showed on Thursday, with financials, the most foreign-owned major Indian sector, accounting for 60% of the total outflows.
The sharp withdrawals came despite early signs of an earnings recovery in the December quarter as the US-Israeli war on Iran sent crude prices surging, pushed the rupee to a record low and rekindled concerns over energy supply, inflation and India’s growth outlook.
Sustained selling dragged the Nifty 50 down 8.1% for the first half of this month, with financials and banks plunging 9.8% and 11.2%, respectively.
The Nifty 50 and Sensex have dropped about 10% each so far this year and confirmed a technical correction last week.
“For global investors, the worry is that higher energy prices could revive inflation, much as they did after the Russia-Ukraine war began in 2022,” said Ross Maxwell, global strategy operations lead at VT Markets, adding that this could keep monetary policy tighter for longer and weigh on energy-importing economies such as India.
Selling spanned 17 of the 24 sub-sectors classified by NSDL, with capital goods one of the few bright spots.
Analysts said the intense pullback in financials had made valuations more appealing for domestic investors.
“Heavy FPI selling in financials has made them attractive and investable,” said VK Vijayakumar, chief investment strategist at Geojit Investments.
However, March outflows from financials could accelerate and hit a record high, with governance worries around HDFC Bank adding to the pressure, according to two analysts. HDFC, the heaviest-weighted stock in the benchmarks, fell about 4.3% on Thursday after the abrupt exit of its part-time Chairman Atanu Chakraborty, who cited differences over “values and ethics”.
Last week, India’s benchmark equity indexes fell 10% from their all-time highs this week, confirming a technical correction, a widely watched threshold that signals a meaningful market pullback, on persistent selling due to the Iran war and soaring oil prices.
The conflict, which has spread across large parts of the Middle East, is expected to weigh on India’s macroeconomic outlook with foreign investors pulling out from higher-risk emerging markets.
The Nifty 50 on Thursday closed 10.4% below its record high of 26,373.20 hit earlier this year. The BSE Sensex settled 10.8% below its lifetime peak of 86,159.02 a day earlier. They closed the week 12.2% and 13.5% below their record high levels.
“There is absolute panic selling in markets,” said Avinash Gorakshakar, founder and head of research at Avinash Mentor Research, as spiking crude prices fan worries over energy security, earnings stress, currency stability and softer consumption.
“Moving averages and momentum-based indicators continue to suggest a bearish undertone, indicating that the near-term trend remains under pressure,” said Sudeep Shah, head of technical and derivatives research at SBI Securities.
Both Nifty and Sensex are trading below their key 50-day, 100-day and 200-day moving averages, implying that the weakness is spreading across medium- and long-term trend signals as well. (Int’l Monitoring Desk)
