US-Iran War: FPIs Sell Rs 22,630 Crore Worth Of Indian Stocks In A Week

The selling of Indian stocks by foreign portfolio investors (FPIs) has intensified since the start of the US–Iran war, as the escalating conflict in West Asia weighs on market sentiment. 

Data from the National Securities Depository (NSDL) showed that FPIs sold Indian equities worth Rs 22,631.60 crore from the secondary markets over the past four sessions. The cautious stance among FPIs comes after the conflict in West Asia took a dramatic turn, when the US and Israel launched coordinated military strikes across key Iranian sites.

According to reports, the attack, dubbed Operation Epic Fury by the US and Operation Lion’s Roar by Israel, struck hundreds of targets across Iran, making it one of the largest military operations seen in the region in recent years.

The coordinated strikes reportedly killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, who had been in power since 1989. Iran subsequently responded with retaliatory attacks on US military bases across several West Asian countries, and since then the offensive is ongoing. The conflict has also disrupted shipping through the Strait of Hormuz, the world’s most critical oil transit route, pushing crude prices significantly higher and raising risks of global recession.

Crude benchmarks have spiked to their 30-month high. The May Brent crude oil futures rallied over 28.30 per cent to hit $93.04 per barrel, while the April West Texas Intermediate (WTI) crude oil futures skyrocketed 35.60 per cent to $90.90 per barrel level.

India relies heavily on imported crude, meeting around 88 per cent of its oil requirement through imports, according to the latest data from the Petroleum Planning & Analysis Cell (PPAC). Of this, about half of these shipments pass through the Strait of Hormuz. Data from S&P Global Commodities at Sea shows that around 41 per cent of India’s crude imports passed through the strait in 2025. This share rose further in early 2026 to nearly 52 per cent of India’s roughly 5 million barrels per day (bpd) crude imports, as domestic refiners reduced their purchases of Russian oil as a precondition for the India–US trade deal to get through.

Such heavy reliance on this route makes India particularly vulnerable when geopolitical tensions disrupt oil flows. Nearly one-fifth of the world’s oil passes through this strait, which means any disruption there can quickly push global crude prices higher.

Higher oil prices often create a ripple effect across the world economy, as it raises transportation and logistics costs, which eventually feed into broader inflation. When inflation rises significantly, central banks across the world often respond by tightening monetary policy through higher interest rates, which can slow economic growth and raise concerns about a broader global economic slowdown.

Stock Market Outlook: How Long Will FPI Selling Continue

Higher crude oil prices also increase India’s import bill, which can widen the current account deficit and put pressure on the rupee. This effect was seen in the past week as the rupee weakened by nearly 1 per cent to 91.93 against the dollar.

A weaker rupee acts as a deterrent for FPIs from increasing their exposure to Indian equities. This is because when FPIs make investments in Indian equities, they do so in rupees, but their returns are ultimately calculated in their home currency, most commonly the dollar. If the rupee weakens against the dollar during the investment period, a part of their gains from the stock market gets eroded when they convert the funds back into dollars.

For instance, if an FPI invests about $100 million in Indian equities and the rupee weakens by around 2 per cent during that period, a part of the gains gets eroded when the money is converted back into dollars. So even if the stock market delivers a 10 per cent return in rupee terms, the depreciation in the currency reduces the investor’s overall return in dollar terms.

VK Vijayakumar, chief investment strategist at Geojit Investments, said that FPIs are unlikely to return as buyers in a meaningful way until there is clearer visibility on how the conflict unfolds and crude oil prices start to ease. He added that Brent crude trading above $90 a barrel is negative for the Indian economy and equity markets.

Vijayakumar added that the market is currently being supported by buying from domestic institutional investors (DIIs) and steady inflows through systematic investment plans (SIPs) in mutual funds. He further said that correction in equities could make valuations more attractive, but strong buying is likely to emerge only after the conflict subsides and crude prices decline.