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Foreign portfolio investor (FPI) flows in 2026 have witnessed significant volatility, influenced by US-Iran war and weak domestic cues. Following a drastic outflow of ₹35,962 crore in January, there was a notable turnaround in February, with inflows reaching ₹22,615 crore, the highest level in 17 months.

Nevertheless, the trend shifted once more in March, as FPIs withdrew a staggering ₹88,180 crore (up until March 20), prompted by increasing global uncertainties, high crude oil prices, and a weakening rupee.

This ongoing sell-off has brought the total FPI outflows for the year to ₹1,01,527 crore so far, underscoring a persistent caution among foreign investors, despite occasional bursts of optimism.

The Indian rupee has depreciated by 4.5% in 2026, reaching an all-time low, while Brent crude, the global oil standard, increased by 1.24% to USD 113.6 per barrel on March 23, as per reports.

On the backdrop of this the Indian benchmark indices are struggling in 2026, as the Nifty 50 has fallen by 13.93% so far this year, while the Sensex has decreased by 14.79% year-to-date.

Talking about the domestic market, and global dynamics, Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd said that this is a time of heightened uncertainty in the market. No one knows how long this war will last and how high crude can go.

Vijayakumar pointed out that more than the price shock, there is a supply shock, too. The non-availability of adequate quantity of LPG has impacted the hotels and restaurants businesses. Supply constraints in LNG has impacted industries using LNG.

"If the war prolongs, say for another one month, and crude price remains elevated for long, India’s GDP growth and corporate earnings for FY 27 will be impacted. This will be hugely negative for markets. On the other hand, if the war ends quickly ( this can happen) the damage to the economy and markets will be insignificant.

Investors should not panic and get out of the market. They should not stop SIPs. It makes sense to watch and wait," advised Vijayakumar.

According to Abhinav Tiwari, the over ₹1 lakh crore FPI outflows from Indian equities in 2026 should be viewed as a cyclical risk-off phase rather than a structural concern.

He explained that foreign investors typically react swiftly to global macro factors such as rising US bond yields, crude oil movements, rupee weakness, and valuation gaps across emerging markets.

The current selling trend is largely driven by concerns around rupee depreciation, elevated valuations, and weaker near-term earnings visibility. Tiwari added that FPI flows have historically been cyclical, and the recent outflows reflect a natural correction after strong inflows in FY24.

Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said that the FIIs continue to press the sell button, offloading ₹5,518 crore in the cash market and extending their selling streak to 16 consecutive sessions. The cumulative outflow now stands at a hefty ₹97,783 crore, clearly signaling a sustained risk-off approach from foreign investors.

On the charts, Nifty 50 opened with a gap down and has now slipped below its key support zone of 22,950–22,900, which had earlier acted as a cushion on 16th and 19th March. The index is currently hovering near 22,500 and is on the verge of filling the 226-point gap formed between 9th–11th April, 2025, explained Shah.

“As the weekly expiry approaches, significant OI buildup is visible at the 22700 and 22800 call strikes, suggesting these levels are likely to act as strong resistance for Nifty. The index is expected to remain under pressure as long as it trades below 22800. On the downside, 22500 emerges as immediate support, with the highest put OI concentration at this strike. A break below this level could trigger further downside,” said Shah.

Further, Abhinav Tiwari of Bonanza, believes that the stock market strategy ahead should focus on gradual accumulation instead of aggressive deployment. The premium valuations India enjoyed historically may not fully return in the next few years because macro conditions such as higher global rates, slower earnings upgrades, and tighter liquidity can keep valuation multiples moderate.

That means investors should prefer quality businesses with earnings visibility, strong balance sheets, and reasonable valuations rather than chasing momentum, explained Tiwari.

“A practical strategy is to keep cash available, accumulate large caps during corrections, stay selective in midcaps, and focus on sectors where earnings remain durable,” said Tiwari.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.Dhanya Nagasundaram works as a Content Producer at LiveMint, specializing in news related to financial markets, stocks, and business. With over eight years of experience in journalism and content creation, she has honed her skills in data-driven reporting and market analysis. Her focus is on monitoring stock trends, initial public offerings (IPOs), corporate news, policy shifts, and larger economic trends that affect investors and market players.

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