FPI Portfolio Value in India Sees Significant Drop of Rs 10 Lakh Crore in March Amid Iran Conflict

Indian Equity Market Sees Near Rs 10 Lakh Crore Drop in Portfolio Value

The Indian equity market witnessed a significant decline in the portfolio value of foreign funds in March, with a near Rs 10 lakh crore drop. According to the latest data from depositories, the total assets under custody (AUC) of Foreign Portfolio Investors (FPIs) stood at Rs 62.46 lakh crore as on March 31, 2025, compared to Rs 72 lakh crore as on February end, indicating a 13% fall.

This sharp decline in the AUC value is the lowest for FPIs in 24 months, with March being an extremely volatile month for Indian markets. The benchmarks fell by over 11% amidst the global sell-off, with the correction being more acute in mid and small cap segments. Some counters lost as much as 20% during the month.

The fall in the portfolio value of FPIs is attributed to two factors: offloading of shares by FPIs and a fall in share prices, which leads to a decrease in portfolio value. During March, FPIs net sold shares worth Rs 1.17 lakh crore from Indian markets.

Market participants expect the Indian market to remain in a wait and watch mode until the Middle East situation improves. Following the announcement of a ceasefire on Wednesday by the US and Iran, the Indian market jumped 3.9%. However, any new escalation in the Middle East and further closure of the Strait of Hormuz could rattle the market again. As of 1 PM on Thursday, Sensex was trading 1% lower.

FPIs from the US and Singapore Experience Significant Drops

US-based funds have seen the biggest dip in value terms, with the total shares owned by US-based FPIs falling by Rs 4 lakh crore from Rs 31.5 lakh crore to Rs 27.5 lakh crore. The US is the largest source of FPI investment into India, accounting for over a third of total FPI investments.

| FPI Source | February AUC | March AUC | % Change | | --- | --- | --- | --- | | US | Rs 31.5 lakh crore | Rs 27.5 lakh crore | -12.8% | | Singapore | Rs 4.7 lakh crore | Rs 4 lakh crore | -14.9% | | Luxembourg | Rs 5.27 lakh crore | Rs 4.5 lakh crore | -14.9% |

In percentage terms, Singapore and Luxembourg have seen steeper 15% falls. Singapore's AUC fell by Rs 70,000 crore from Rs 4.7 lakh crore to Rs 4 lakh crore, while Luxembourg's AUC fell by Rs 75,000 crore from Rs 5.27 lakh crore to Rs 4.5 lakh crore.

The fall in portfolio value of FPIs is evident across all types of funds, even for investors with long-term mandates. For instance, Sovereign wealth funds saw their asset value fall from Rs 4.9 lakh crore to Rs 4.3 lakh crore, indicating a dip of about 10%. Foreign Central Banks saw their portfolio fall by over 15% from Rs 1.58 lakh crore in February to Rs 1.34 lakh crore in March.