Despite the divergence in flows, benchmark indices ended higher. The Sensex rose 326 points to 74,533, while the Nifty50 gained 112 points to settle at 23,115, led by buying in IT, auto and midcap stocks.
The rupee, however, remained under pressure. It hit an intra-day record low of 93.76 and closed at an all-time low of 92.71 against the dollar, compared with 92.63 in the previous session, reflecting sustained FII outflows.
Also read: Sensex, Nifty hold firm amid volatility led by IT, autos, midcaps; rupee at record low
The selling trend is not limited to a single session. So far this month, FIIs have pulled out $8.3 billion from Indian equities, reversing the buying momentum seen in February and signalling a more cautious stance amid escalating geopolitical tensions.
This shift comes even as foreign investors recalibrated their portfolios because of the volatility in the West Asia war post February 27. Exposure to industrials and energy stocks has risen to multi-month highs, while holdings in financials have been cut sharply, indicating a tactical sectoral churn rather than a complete withdrawal from the market.
The contrast with last month is stark. In February, FIIs were net buyers, investing $1.7 billion in Indian equities after an interim India-US trade deal lifted sentiment and improved risk appetite for emerging markets.
Also read: FIIs turn sellers in March as West Asia tensions trigger $8.3 bn outflows
Explaining the recent volatility, Vinod Nair, Head of Research at Geojit Investments Limited, said, “Market sentiment remained cautious amid persistent Middle East tensions during the week, with elevated crude oil prices, and continued FII selling. Although the domestic equities saw a brief relief-led recovery on valuation comfort and short covering early in the week, the rally quickly reversed as renewed Middle East attacks pushed crude prices higher, reviving inflationary and macroeconomic concerns. Brent crude rose over the course of the week, while the rupee depreciated to fresh lows, further pressuring risk assets.”
He added that while there were signs of some stabilisation later in the week on hopes of de-escalation, investors remained reluctant to carry risk positions. “Sectorally, autos, metals, and PSU banks outperformed, supported by bargain hunting following recent corrections. In contrast, oil & gas, FMCG, real estate, financial services underperformed due to input cost pressures, rupee weakness, and stock-specific pressures,” Nair said.
