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Domestic flows absorbed historical outflows from FPIs

ICICIdirect Research 10 Apr 2026 DISCLAIMER

Indian markets observed a historic, record-breaking sell-off in Indian equities in March 2026, withdrawing over ₹1.2 lakh crore (~ $12.3 billion) as geopolitical instability and rising crude prices prompted a broad risk-off sentiment. The financial services sector, particularly Banking bore the brunt of this exodus, accounting for over 50% of total FPI selling in the month despite having~33% of index weight.
Also, FPIs have remained net sellers in April as well and sold ~30k crores in just 6 trading sessions but markets have recovered significantly suggesting concentrated selling among few heavyweights. Heavy buying by Domestic Institutional Investors (DIIs) provided a significant cushion, limiting the overall market impact of the sell-off as they poured more than 1.2 Lakh crores in the recent market weakness.
Among heavyweights, HDFC Bank saw sharp cut in its FIIs ownership during the March quarter where they have reduced their exposure from 47.67% to 44%.  A 3.6% weight reduction in HDFC Bank is worth ~45000 crores (On a base of 13 Lakh crores) clearly suggesting major outflow from HDFC Bank as out of ~61k crores sell-off from BFSI space during the quarter, majority of the outflow happened from HDFC Bank only.

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