Foreign institutional investors (FIIs) offloaded more than ₹8,500 crore worth of Indian equities on Tuesday, marking the largest single-day outflow since February 2025, according to provisional exchange data.

The selloff comes amid heightened global risk aversion, rising crude oil prices and persistent geopolitical tensions, factors that have prompted foreign investors to pare exposure to emerging markets.

Data released by the national stock exchange of India showed that foreign portfolio investors sold equities worth ₹8,752 crore on a net basis during the session. The magnitude of the outflow makes it the biggest daily selloff since February 28, 2025, when overseas investors had pulled out more than ₹11,600 crore from domestic equities.

Domestic institutional investors (DIIs), however, stepped in to cushion the impact of the foreign selling. Mutual funds, insurers and other domestic institutions were net buyers during the session, helping limit the downside in benchmark indices.

Global risk factors trigger capital outflows

Market participants said the sharp selling by foreign investors was largely driven by a broader shift toward safer assets globally.

Rising tensions in West Asia have pushed crude oil prices higher, raising concerns about inflationary pressures and the potential impact on global growth. Higher oil prices typically weigh on import-dependent economies such as India, often prompting foreign investors to trim their exposure.

The benchmark Nifty 50 and BSE Sensex had rallied strongly in recent months, leading some global funds to book profits amid uncertainty in global markets.

Analysts said global portfolio reallocations and currency movements may also be influencing foreign investor behaviour. A strengthening US dollar and rising bond yields in developed markets tend to make emerging-market equities less attractive for global investors.

Domestic flows provide stability

Despite the heavy foreign selling, market experts pointed out that robust domestic liquidity continues to provide an important counterbalance.

Strong inflows into mutual funds through systematic investment plans (SIPs) and sustained participation from insurance companies and pension funds have helped absorb foreign outflows in recent years. This trend has reduced the market’s dependence on overseas capital compared with earlier cycles.