FIIs sold stocks worth Rs 8,752 crore on Thursday, according to BSE provisional data. Domestic institutional investors (DIIs) provided support, buying shares worth Rs 12,068 crore, part of the fall.
The fresh inflow comes after FIIs briefly turned net buyers in February, pouring Rs 12,590 crore into Indian equities. The change raised hopes of a stabilizing trend after heavy withdrawals in recent months. So far in calendar 2025, foreign investors have already withdrawn around Rs 34,000 crore in January, after selling Rs 1.5 lakh crore in the previous year.
The renewed selloff coincided with a sharp deterioration in geopolitical conditions. Equity investors lost Rs 16.32 lakh crore in just two trading sessions as tensions between the US, Israel and Iran escalated.
On Wednesday, the BSE Sensex fell over 1,122 to close at 79,116. During the session, it had fallen as much as 1,795 points. Since Friday, the index has fallen 2,171 points, or 2.67%, since the start of hostilities on February 28. During the same period, the market cap of BSE-listed companies fell by Rs 16.32 lakh crore.
Markets were closed for Holi on Tuesday, reducing volatility in just two sessions.
Ajit Mishra, SVP Research at Religare Broking, said sentiment remains volatile. “Markets traded with a negative bias on Wednesday, extending their recent corrective trend amid weak international cues and persistent geopolitical concerns. Continued foreign institutional selling and currency volatility further undermined confidence,” he said. Brent crude rose 1.63 percent to $82.73 a 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 generally weigh on foreign flows.
Analysts say FII is reacting to both global risk aversion and India’s specific macro sensitivities to oil. With almost 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 perspective, Shrikant Chauhan, head of equity research at Kotak Securities, said the near-term outlook remains weak but sellable. He sees 24,300 in Nifty and 78,500 in Sensex as important support levels. “If the market holds above this level, immediate resistance will be at 24,600/79,500. Conversely, a break below 24,300/78,500 could change sentiment,” he said, adding that volatility is expected to remain high.
For now, domestic institutions have stopped part of foreign sales. But with crude prices rising and the dispute showing little sign of an immediate resolution, the direction of FII flows could remain the deciding factor for market stability in the coming sessions.
