Foreign Investment Flows – Secondary-Market Selling Drives Sharp Outflows

10 Mar 2026 , 12:54 PM

Weekly Capital Flows Commentary: Mar 02 – Mar 06, 2026

Foreign portfolio investors recorded a net outflow of INR 238.34 billion during the week ended March 6, 2026, marking a sharp reversal from the modest inflows seen in the previous week. The withdrawal was primarily driven by heavy selling in the secondary equity market, which outweighed limited primary-market investments. Additional outflows from debt, hybrid instruments, and mutual funds further contributed to the negative trend, reflecting renewed caution among foreign investors.

Equity Markets: Total equity flows for the week showed a net outflow of INR 218.81 billion, largely due to significant selling in the secondary market, which recorded withdrawals of INR 221.79 billion. This selling pressure overshadowed the primary market investment of INR 2.98 billion, resulting in a sharp overall decline in equity flows.

Debt and Alternative Segments: Debt instruments recorded net outflows of INR 13.23 billion, indicating some pullback from fixed-income exposure during the week. Hybrid securities also saw withdrawals of INR 4.54 billion, while mutual funds registered a small outflow of INR 1.76 billion. Meanwhile, alternative investment funds (AIFs) recorded no net movement during the period, reflecting broader caution among foreign investors.

Table: FPI flows for the week

Asset Class	Net Investment (INR Billions)
Foreign_Investors	-238.34
Foreign_Investors.Debt	-13.23
Foreign_Investors.Equity	-218.81
Foreign_Investors.Equity.Primary	2.98
Foreign_Investors.Equity.Secondary	-221.79
Foreign_Investors.Mutual_Fund	-1.76
Foreign_Investors.Hybrid	-4.54
Foreign_Investors.AIF	0.0

Source: NSDL

Table: Recent history of FPI flows

Week Ending	Net Investment (INR Billions)
06 Mar, 2026	-238.34
27 Feb, 2026	8.18
20 Feb, 2026	68.15
13 Feb, 2026	69.34
06 Feb, 2026	132.47
30 Jan, 2026	60.76
23 Jan, 2026	-50.27
16 Jan, 2026	-143.06
09 Jan, 2026	-82.27
02 Jan, 2026	-96.41

Source: NSDL

Figure: History of FPI flows

Source: NSDL

FPI flows in Equity

FPIs recorded significant net outflows from Indian equities during the week ended March 6, 2026, with total withdrawals of INR 218.8 billion. The negative balance was largely driven by heavy selling in the secondary market, which recorded net outflows of INR 221.8 billion, while the primary market saw modest inflows of INR 3.0 billion.

Compared with the previous week, when primary-market participation supported overall equity flows (despite mild secondary-market selling), the latest week saw a sharp deterioration in flows. Over the prior five weeks, equity flows were largely positive, supported by a pickup in secondary-market buying and steady primary-market participation. However, the latest week saw secondary-market selling intensify sharply, overwhelming the modest primary inflow and reflecting a broader risk-off stance among foreign investors amid rising Middle East tensions.

Table: Recent history of FPI flows in Equity

Week Ending	FPI.Equity	FPI.Equity.Primary	FPI.Equity.Secondary
06 Mar, 2026	-218.8	3.0	-221.8
27 Feb, 2026	4.8	14.7	-9.9
20 Feb, 2026	30.8	-0.4	31.2
13 Feb, 2026	19.4	24.0	-4.5
06 Feb, 2026	97.3	3.1	94.2
30 Jan, 2026	27.6	17.6	10.0
23 Jan, 2026	-97.4	5.5	-102.9
16 Jan, 2026	-116.0	5.2	-121.2
09 Jan, 2026	-85.1	0.3	-85.4
02 Jan, 2026	-131.7	1.3	-132.9

Source: NSDL

Figure: History of FPI flows in equity

Source: NSDL

FPI flows in Debt

The latest weekly data shows that foreign portfolio investors turned net sellers in Indian debt during the week ended March 6, 2026, recording outflows of INR 13.2 billion. This marks a reversal from the consistent inflows seen in recent weeks, ending the multi-week buying trend in the debt segment. The shift indicates some moderation in foreign participation in domestic fixed-income markets after a period of sustained purchases.

Recent flow patterns show that debt markets have witnessed steady foreign inflows since late January, with particularly strong buying in mid-February, before the latest week saw flows turn negative. The reversal suggests that foreign investors have turned more cautious toward Indian debt, likely reflecting changing global risk sentiment and evolving interest-rate expectations.

Table: Recent history of FPI flows in debt

Week Ending	Net Investment (INR Billions)
06 Mar, 2026	-13.2
27 Feb, 2026	29.3
20 Feb, 2026	38.1
13 Feb, 2026	51.4
06 Feb, 2026	43.4
30 Jan, 2026	33.2
23 Jan, 2026	43.0
16 Jan, 2026	-26.5
09 Jan, 2026	0.2
02 Jan, 2026	36.2

Source: NSDL

Figure: History of FPI flows in debt

Source: NSDL