Indian Equities: Like global equities, Indian domestic markets also experienced one of their most difficult months in years during March 2026. Soaring crude oil prices, record foreign portfolio investor (FPI) outflows, a sharply depreciating rupee, and weakening macroeconomic fundamentals triggered the steepest monthly decline in Indian benchmark indices in six years. Though the Iran-Israel conflict was the immediate trigger, the depth of the selloff revealed structural vulnerabilities that had been building beneath India’s headline growth story for months.
The damage was severe and broad-based. The Nifty 50 fell 11.3% and the BSE Sensex dropped 11.5%, its sharpest monthly decline since March 2020, amid soaring crude oil prices and sustained foreign outflows. Mid and small-cap segments offered little hope, with the Nifty Midcap 100 declining 10.9% and the Nifty Smallcap 100 falling 10.2%. Heightened uncertainty was reflected in a 103.5% surge in India VIX.
Selling pressure was broad-based, with every sectoral index closing the month in red. The PSU Bank Index suffered the steepest decline, plunging 19.8%, followed by the Realty Index (-16.6%), Private Bank Index (-15.6%), Auto Index (-15.6%), FMCG (-11%), and Media (-11%).
The few pockets of relative resilience were limited to energy producers. Oil & gas upstream companies and few public sector undertakings with significant commodity exposure outperformed the broader market, as the surge in commodity prices provided a revenue tailwind amid widespread weakness elsewhere.
The foreign capital flight in March 2026 broke all previous records. FPIs pulled out Rs.1.12tn ($12.1bn) from Indian equities, the worst monthly selloff on record, surpassing the previous high of Rs.940bn in October 2024. The scale of outflows ranks among the highest globally. In contrast, DIIs provided strong support, investing Rs.1.42tn during the month.
Under these circumstances, our top ideas includes Supreme Industries, Aadhar Housing Finance, Home First Finance, Neogen Chemicals Ltd, Greenply Industries Ltd, and Molt-Tek Packaging.
