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India Stocks Plunge: FPI Selloff Triggers Worst Fortnight Since 2020
19 Mar
Summary
- Foreign investors offloaded stocks at the fastest pace in 17 months.
- India's major equity benchmarks are on track for worst losses since March 2020.
- Rising crude oil prices due to the Iran war are fueling inflation fears.
India's primary equity benchmarks are experiencing their most significant downturn since the March 2020 market crash, with foreign investors leading the sell-off. In the first half of March, foreign portfolio investors withdrew ₹52,704 crore ($5.65 billion), marking the fastest exodus in 17 months.
This aggressive selling pressure has resulted in the Nifty 50 declining 8.1% over two weeks, the worst performance since the pandemic-induced crash. Both the Nifty 50 and the S&P BSE Sensex have fallen approximately 10% year-to-date, confirming a technical correction.
The market sentiment soured due to the Iran war, which caused crude oil prices to surge. For India, a nation importing about 85% of its energy needs, this development has created significant economic uncertainty, overshadowing earlier signs of an earnings recovery.
Financial sector stocks have been particularly hard hit, with the broader financials gauge dropping 9.8% and the banking index falling 11.2%. Further pressure on financials intensified following corporate governance concerns at HDFC Bank, whose shares dropped significantly after the abrupt resignation of its part-time chairman.
