Foreign funds saw ₹10L crore drop amid Iran-US war
What's the story
Foreign Portfolio Investors (FPIs) in Indian stocks suffered a massive loss of nearly ₹10 lakh crore in March 2025, owing to the escalating tensions between Iran and the US. The total value plummeted from ₹72 lakh crore at the end of February to just over ₹62 lakh crore by March's end. This marks a two-year low for FPIs, largely due to heavy selling and global market jitters.
Market impact
Indian markets were extremely volatile in March
March was an extremely volatile month for Indian markets, with benchmark indices falling over 11% amid a global sell-off. The correction was especially severe in mid and small-cap segments, with some stocks losing as much as 20% during the month. This decline in portfolio value can be attributed to two factors: share offloading by FPIs and falling share prices.
Fund losses
US-based funds see biggest drop
US-based funds witnessed the biggest drop in value terms, with their total shareholding in India falling by ₹4 lakh crore from ₹31.5 lakh crore to ₹27.5 lakh crore. The US is the largest source of FPI investment into India, accounting for over a third of total FPI investments. However, Singapore and Luxembourg have seen steeper percentage falls of 15% each during this period.
Broader impact
Sovereign wealth funds also impacted
The decline in portfolio value isn't limited to US-based funds but is seen across all types of funds, including those with long-term mandates. Sovereign wealth funds saw their asset value dip by about 10% from ₹4.9 lakh crore to ₹4.3 lakh crore. Foreign Central Banks also witnessed a portfolio fall of over 15% from ₹1.58 lakh crore in February to ₹1.34 lakh crore in March due to these global market fluctuations.