According to provisional data from the BSE, FIIs sold equities worth Rs 8,752 crore on Thursday. Domestic institutional investors (DIIs) provided support, buying shares worth Rs 12,068 crore, cushioning part of the fall.
The fresh outflows come after FIIs had briefly turned net buyers in February, infusing Rs 12,590 crore into Indian equities. That reversal had raised hopes of a stabilising trend following heavy withdrawals in recent months. In calendar 2025 so far, foreign investors had already pulled out around Rs 34,000 crore in January, after selling over Rs 1.5 lakh crore in the previous year.
The renewed selling coincides with a sharp deterioration in geopolitical conditions. Equity investors have seen wealth erosion of Rs 16.32 lakh crore in just two trading sessions as tensions between the US, Israel and Iran intensified.
On Wednesday, the BSE Sensex dropped over 1,122 points to close at 79,116. During the session, it had plunged as much as 1,795 points. Since Friday, the index has fallen 2,171 points, or 2.67%, following the onset of hostilities on February 28. Over the same period, the market cap of BSE-listed firms shrank by Rs 16.32 lakh crore.
Markets were shut on Tuesday for Holi, compressing volatility into just two sessions.
Ajit Mishra, SVP Research at Religare Broking, said sentiment remains fragile. “Markets traded with a negative bias on Wednesday, extending their recent corrective trend amid weak global cues and persistent geopolitical concerns. Continued foreign institutional selling and currency volatility further dampened confidence,” he said.A key driver of risk aversion has been the surge in crude oil prices. Brent crude rose 1.63% to $82.73 per barrel, reflecting concerns over supply disruptions through the Strait of Hormuz. Higher oil prices raise inflation risks, pressure the rupee and complicate the interest rate outlook, factors that typically weigh on foreign flows.
Analysts say FIIs are reacting to both global risk aversion and India-specific macro sensitivities to oil. With nearly half of India’s crude imports transiting through the Strait of Hormuz, any prolonged disruption could worsen the current account deficit and fiscal pressures.
From a technical standpoint, Shrikant Chouhan, Head of Equity Research at Kotak Securities, said the near-term outlook remains weak but oversold. He sees 24,300 on the Nifty and 78,500 on the Sensex as crucial support levels. “If the market sustains above this level, the immediate resistance would be at 24,600/79,500. Conversely, a decline below 24,300/78,500 could change the sentiment,” he said, adding that volatility is expected to remain elevated.
For now, domestic institutions have offset part of the foreign selling. But with crude prices elevated and the conflict showing little sign of immediate resolution, the direction of FII flows could remain a decisive factor for market stability in the coming sessions.
