Foreign Selling in Indian Markets Continues; IT and Consumer Stocks See Heavy Outflows

Foreign investors continued to offload Indian stocks in the first half of March, with information technology (IT) and consumer goods sectors bearing the brunt of the selling. The sell-off comes amid growing concerns over economic conditions in both the U.S. and India, leading to cautious sentiment among global investors.

Foreign Portfolio Investors (FPIs) Exit in Large Numbers

According to exchange data released on Thursday, Foreign Portfolio Investors (FPIs) offloaded $3.5 billion worth of Indian equities during the first two weeks of March.

• IT stocks accounted for ₹69.34 billion ($803 million) of the total selling.

• Consumer stocks saw $591 million in outflows.

The ongoing sell-off adds to the massive $28 billion foreign capital outflow from Indian equities between October 2024 and March 2025. This exodus has contributed to a 13% decline in the Nifty 50 index since it hit record highs on September 27, 2024.

IT Sector Under Pressure as US Worries Mount

The Nifty IT index dropped 3.2% in the first half of March, even as the Nifty 50 benchmark rose 1.2% during the same period. The IT sector officially entered a bear market on March 12, having fallen over 20% from its recent peak.

Analysts attribute the decline to concerns over a potential slowdown in the U.S. economy and inflationary pressures, driven by President Donald Trump’s unpredictable tariff policies. These factors have dimmed expectations for earnings growth in India’s IT sector, which heavily relies on U.S. clients.

Market Outlook: Will the Selling Pressure Continue?

With global uncertainty persisting and foreign investors remaining cautious, market experts suggest that volatility in Indian equities could continue in the near term. The focus will now be on central bank policies, economic data, and global trade developments, which could influence investor sentiment going forward.

Investors will be closely watching corporate earnings reports, U.S. economic indicators, and geopolitical developments, as these will play a crucial role in determining the next market trend.