Foreign portfolio investor holdings in Indian equities witnessed a sharp contraction in March, reflecting heightened global uncertainty and a broad-based market correction.
The decline comes amid geopolitical tensions that impacted investor sentiment across global markets.
Data from depositories shows that total assets under custody of foreign portfolio investors dropped to ₹62.46 lakh crore as of March 31, 2025, compared to ₹72 lakh crore at the end of February.
This represents a decline of nearly ₹10 lakh crore, or about 13% on a monthly basis. The March figure also marks the lowest level recorded in the past 24 months.
The fall was driven by a combination of factors, including significant selling activity by foreign investors and a decline in equity prices. During the month, FPIs were net sellers of shares worth ₹1.17 lakh crore, adding to downward pressure on markets.
Indian equity markets experienced considerable volatility during March, with benchmark indices declining by more than 11% amid a global sell-off triggered by the Iran–US conflict.
The correction was more pronounced in mid-cap and small-cap stocks, where some counters fell by as much as 20%.
Market participants expect a cautious approach in the near term, with investors closely monitoring developments in the Middle East. Following a ceasefire announcement between the US and Iran, markets briefly rebounded by 3.9%.
However, concerns remain that any escalation or disruption in key routes such as the Strait of Hormuz could trigger renewed volatility.
Among foreign investors, US-based funds recorded the largest decline in absolute terms. Their holdings fell by ₹4 lakh crore, from ₹31.5 lakh crore to ₹27.5 lakh crore.
The US continues to remain the largest source of FPI investments in India, accounting for more than one-third of total holdings. In percentage terms, Singapore and Luxembourg witnessed steeper declines of around 15% each.
Singapore’s assets under custody dropped by ₹70,000 crore to ₹4 lakh crore, while Luxembourg saw a decline of ₹75,000 crore to ₹4.5 lakh crore. These 2 countries remain the second and third largest sources of foreign investments into Indian equities.
The decline in portfolio value was observed across various categories of foreign investors. Sovereign wealth funds saw their holdings fall from ₹4.9 lakh crore to ₹4.3 lakh crore, representing a drop of around 10%.
Foreign central banks also recorded a significant decline, with their portfolio value decreasing by more than 15%, from ₹1.58 lakh crore in February to ₹1.34 lakh crore in March.
Read More: RBI Keeps FPI Investment Limits in Government Securities Unchanged for FY27!
The sharp fall in FPI assets highlights the sensitivity of capital flows to global geopolitical developments and market corrections, with both selling activity and price declines contributing to the overall reduction in portfolio value.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Apr 10, 2026, 10:37 AM IST
Team Angel One
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