Foreign portfolio investors (FPIs) have taken a step back from the Indian stock markets, marking their third consecutive month of net selling. In March 2025, FPIs have offloaded shares worth approximately ₹3,973 crore. This trend of disinvestment has been evident since the start of the year, with total sales reaching ₹78,027 crore in January and ₹34,574 crore in February.

The Current Market Landscape

Despite the recent downturn, FPIs previously played a significant role in propelling the stock market upwards. The benchmark Sensex now sits around 8,500 points lower than its peak of 85,978 points. Interestingly, the pace of selling has shown signs of slowing down as March progressed.

• FPI Sales Overview:
  • January: ₹78,027 crore
  • February: ₹34,574 crore
  • March: ₹3,973 crore

Shifts in Investment Strategies

According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, there has been a noticeable shift in foreign institutional investors’ (FIIs) strategies. He noted, "The transition from consistent selling to limited buying became evident by the week ending March 21, and this trend intensified through the following week. Significant purchases made by FIIs during the final days of March notably decreased the overall FII sales for the month."

Global Context and Domestic Resilience

While Indian markets have faced challenges, they have outperformed many global counterparts recently. This resilience comes amid ongoing global market volatility, primarily due to the uncertainties surrounding potential new U.S. tariffs. A favorable inflation report for February has also provided some support to the local equity indices, which have faced pressure from the tariff discussions and continued outflows of foreign capital.

• Key Points on U.S. Tariffs:
  • President Donald Trump has reiterated his commitment to tariff reciprocity, prompting caution among investors.
  • This policy means that the U.S. may impose tariffs equivalent to those set by other countries, including India, maintaining a focus on fair trade.

Market Performance Overview

Looking at the broader market performance:

• In 2024, both Sensex and Nifty recorded growth of about 9-10%.
• In 2023, they achieved gains of 16-17% cumulatively.
• The year 2022 saw a modest increase of just 3% for both indices.

As the financial landscape evolves, investors will be keeping a close eye on both domestic and international developments that could influence market dynamics. Understanding these trends is essential for making informed investment decisions in the current climate.