Record $12 Billion Foreign Outflow from Indian Equities Amid Iran Conflict

Written by Emily J. Thompson, Senior Investment Analyst

Source: CNBC

Updated: 3 days ago

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Source: CNBC

Record Outflow: In March 2026, foreign investors have withdrawn ₹1.12 trillion (approximately $12.1 billion) from Indian equities, marking the largest monthly sell-off on record, reflecting heightened concerns over the Middle East conflict and its potential to slow India's economic growth.
Growth Slowdown: HSBC's Purchasing Managers' Index indicates that India's private sector activity has dropped to its lowest level since October 2022, primarily due to weaker domestic demand and rising inflationary pressures, which are expected to negatively impact future economic growth.
Rising Energy Costs: As the world's third-largest oil importer, India faces increasing energy costs, with projections suggesting that if oil prices stabilize between $85 and $95 per barrel, capital outflows could reach $40 to $50 billion, further affecting India's GDP.
Currency Pressure: Despite regular interventions by the Reserve Bank of India, the rupee has significantly weakened, and ongoing geopolitical concerns in the Middle East are exacerbating capital outflows, leading analysts to warn that attracting foreign investment will become increasingly challenging.

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About HSBC

HSBC Holdings plc (HSBC) is a banking and financial services company. Its business segments include Hong Kong, UK, Corporate and Institutional Banking (CIB), and International Wealth and Premier Banking (IWPB). Its Hong Kong business comprises retail banking and wealth and commercial banking of HSBC Hong Kong and Hang Seng Bank. Its UK business comprises UK retail banking and wealth (including first direct and M&S Bank) and UK commercial banking, including HSBC Innovation Bank. The CIB segment is formed from the integration of its commercial banking business (outside the UK and Hong Kong) with its global banking and markets business. The IWPB segment comprises premier banking outside of Hong Kong and the UK, its global private bank, and its asset management, insurance and investment distribution businesses. Its customers worldwide through a network covering 58 countries and territories. Its customers range from individual savers and investors to companies, governments and others.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.

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