Foreign money exodus: $13 billion pulled out in just 27 days

Foreign investors are withdrawing funds from India at an unprecedented pace. In the 27 days of March alone, foreign portfolio investors sold equities worth over $13 billion (Rs 1.1 lakh crore), the largest monthly outflow on record.

This comes after a brief recovery in February, when flows had turned positive. But that rebound turned out to be only short-lived.

Why is this happening?

Geopolitical turmoil has played a key part. The ongoing Israel-US-Iran War has triggered a significant spike in global crude oil prices. Brent Crude surpassed $115 per barrel in recent weeks.

For India, the impact has been immediate and severe. As per the latest data from the Government of India’s Petroleum Planning and Analysis Cell, India's oil import dependency was 88.6 per cent between April 2025 and January 2026, up from 88.2 per cent in the corresponding period of the previous financial year. Higher oil prices feed directly into inflation and weaken the rupee.

This is already visible. The rupee has depreciated sharply in the last two years, sliding from around Rs 83 per dollar in early 2024 to nearly Rs 94.65 per dollar by March 30 this year. In just a month, the rupee slid by more than four per cent from Rs 90.95 on February 27 to Rs 94.65 on March 30.

For foreign investors, a weaker rupee cuts into their returns, making Indian investments less attractive, prompting them to pull back.

How much has investment fallen?

According to data from the National Securities Depository Limited, after strong inflows in 2024, including a peak of over $11 billion in September that year, FPIs began withdrawing funds. The pattern continued through 2025, with intermittent inflows. By early 2026, selling intensified sharply, with March alone seeing a record outflow of $13.3 billion (as of March 27).

There is also a change in how investors are positioning themselves. As per the latest market data, foreign institutional investors are holding short positions of around 85 per cent in index futures — active bets on further downside in Indian markets — indicating a bearish outlook.

As a result, benchmark indices are headed for their worst monthly decline since March 2020. It is a consequence of heavy foreign selling, rising oil prices, and global uncertainty, according to a Reuters report.

Retail investors, especially those who entered during the post-Covid-19 boom, are now seeing increased volatility in their portfolios.

Analysts say the trajectory of foreign flows will depend broadly on how global risks evolve. If crude prices remain elevated and geopolitical conflict persists, pressure on both the rupee and equity markets could continue in the near term.

- Ends

Published By:

Pathikrit Sanyal

Published On:

Mar 30, 2026 18:47 IST