Foreign Investors Withdraw ₹13,027 Crore from Indian Government Securities in March 2026

Foreign portfolio investor (FPI) flows into government securities under the fully accessible route (FAR) turned negative in March 2026, reversing the inflow trend seen earlier this year as global risk sentiment weakened.Foreign investorshave net sold ₹13,027 crore worth of FAR securities so far in March, according to data from the Clearing Corporation of India Limited (CCIL).Market participants said the reversal was mainly due to deterioration in global risk appetite. Rising geopolitical tensions in West Asia pushedcrude oil prices above $100 per barrel, raising concerns over imported inflation and India’s current account deficit. Higher oil prices also pressured the rupee, reducing returns for foreign investors.“From an FPI perspective, equities are clearly in negative territory, and even on the debt side, the perceived weakness in the rupee is weighing on sentiment. As a result, bonds are not particularly attractive to foreign investors right now,” said the treasury head at a private bank.At the same time, rising US Treasury yields made emerging market debt less attractive, leading to a shift in global capital away from markets such as India. Traders said currency volatility along with higher global yields reduced the appeal of hedged returns on FAR bonds.Also ReadTrump, Iran escalate conflict with threats to energy, water facilitiesRBI firefights to keep rupee afloat amid outflows, external pressurespremiumSouth Indian Bank appoints ex-RBI ED Jose Kattoor as part-time chairmanFPIs pull ₹88,180 cr in Mar, 2026 outflows cross ₹1 trn on West Asia warForex reserves drop $7 bn to $709.75 bn on fall in foreign currency assetspremiumDespite the outflows, the impact on bond yields remained limited due to the Reserve Bank of India’s intervention through bond purchases and liquidity measures. Analysts said these steps helped keep the sovereign yield curve stable even as foreign demand weakened.“I don’t see yield (on the benchmark 10-year government bond) falling sharply below 6.5 per cent, nor do I expect an immediate spike to 7 per cent. At this stage, the market is likely to remain range-bound, with yields broadly moving between 6.55 per cent and 6.75 per cent in the near term,” said a dealer at a private bank.