India Markets Fall as Crude Surges, FPI Selling Rises

Research Desk13 March 20266 min read

India markets drop amid rising crude oil prices, FPI outflows, and rupee weakness. Key macro trends, inflation data, and investment outlook explained.

Weekly Capsule (Mar 09 – Mar 13) and Impact Analysis

News Announcement	Impact Analysis
India CPI inflation for February 2026 came in higher at 3.21% yoy	The surge in headline inflation from 2.74% in January 2026, was led by a sharp surge in food and fuel inflation While food inflation touched 3.47%, fuel inflation got hit by war worries, while gold and silver continue to core inflation
US to release 400 million barrels and Japan 50 million barrels of crude oil	This reduction in stockpiles is expected to stabilize the price of crude in the short term, having already crossed $100/bbl However, oil analysts contend that if the Iran crisis continues, then this may not help, and Brent will still get to $150/bbl
Sensex is down nearly 14% from the peak of 2026, sharpest fall since 2011	The sharp fall has led to market cap erosion to the tune of $575 billion since the start of the calendar year 2026 Amidst crude crossing $100/bbl and the USDINR at ₹92.63/$, the selling in the frontline indices has been very heavy
FPIs have sold $5.73 billion in Indian equities in first 2 weeks of March 2026	The selling was a lot heavier in the second week of March, with FPIs selling equities to the tune of nearly $3.44 billion The selling has been across the board, although banking and oil stocks appear to have borne the brunt of Beta selling
US Q4 growth lowered to just 0.7%, largely on export hit and shutdown	For the full year, the GDP growth at 2.1% was close to the previous year growth of 2.2%, due to good third quarter With contraction in non-farm payrolls, the Fed may have a strong base case to cut rates in the March 2026 meeting
US Consumer Inflation for February 2026 came in flat at 2.4% levels	While the core inflation was higher at 2.5%, the concern for the US Fed would be PCE inflation at closer to 2.9% Higher fuel prices is likely to be one of the key factors to watch as an inflation driver in the next few months
Russia to price crude at par with market prices for the next India consignment	Russian crude has become essential for India as the blockade of the Straits of Hormuz has almost stopped GCC shipments Interestingly, Russian crude happens to be very low on sweetness and that normally entails higher refining costs
Mutual funds saw net inflows of ₹94,500 crores across fund categories	Equity and debt funds saw positive flows in February, with equity fund flows triggered by Flexicap and mid-cap funds However, the flows into passive funds sobered sharply in the month as gold and silver became a lot more volatile
SIP flows in Feb-26 tapered to ₹29,845 crore, sharply lower than Jan-26	However, the lower gross SIP inflows can be attributed to February being a shorter month than January and December SIP flows are likely to stabilize in March, although the SIP stoppage ratio was relatively lower in February 2026 at 75%
CMPDIL, an arm of Coal India, will float its IPO (total OFS) on March 20, 2026	This is the second subsidiary of Coal India to go for an IPO in 2026, after Bharat Coking Coal in January 2026 Central Mine Planning & Development Institute (CMPDI) gives consultancy services on coal exploration and mine planning
Pieter Elbers steps down as CEO of Indigo Airways as Rahul Bhatia steps in	Apart from the recent flight shutdown crisis, Pieter Elbers also does not fit into the definition of an Indian CEO for airlines Interestingly, the board has also relieved Pieter Elbers with immediate effect, without insisting on notice period
Power, households, and Transport get top priority in gas quota allocation	These three segments will get 100% of their average gas consumption over the previous six months subject to stocks Among the sectors facing curbs, Fertilizers get 70% allocation, commercial CGD consumers 80%, and refineries 65% only
The volatility in crude prices is expected to push up paint prices sharply in India	Leading paint manufacturers, Asian Paints and Berger Paints, are expected to hike paint prices by up to 5% very soon Crude oil linked derivatives account for about 55% of the total input cost of paints, so the correlation is quite strong
One of the big beneficiaries of the crude spike has been TTK Prestige	The company has seen a surge in demand for its induction cooktops, which can operate on electricity, instead of gas The demand was so quick and sudden that the stock price of TTK Prestige surged by over 17.3% in just one week
Airtel has made final call for the balance 75% of the funds in 2021 Rights	The ₹21,000 crore rights issue had only collected 25% on application with about ₹15,800 core to be collected now Investors will still make a lot of money as the second tranche is at ₹401.25 to convert the shares into fully paid up
Debt fund managers shift to liquid assets amid the global turmoil	The idea is to cut duration risk and focus more at the short end through instruments like Treasuries, CPs, and CDs. Debt funds also need to handle heavy March redemptions as businesses need to pay advance tax before 15-March
Fitch Ratings raises India GDP forecast for FY26 to 7.5% and FY27 to 6.7%	Despite the global turmoil, Fitch contends that robust domestic demand for goods and services should support According to Fitch, the change in the GDP methodology and its base year will also help giving an upward fillip to GDP growth
SEBI limits intraday borrowing by mutual funds only to redemptions	While borrowings can also be used for dividend payouts, they cannot be used for the purpose of investment and leverage The AMC will also have to take approval for the borrowing from the AMC board as well as from the Board of Trustees
India plans to launch ₹1,00,000 crore Economic Stabilization Fund for crises	The idea of the fund is to effectively respond to an economic crisis (like the current crisis) and offer a shield to consumers The Finance Minister also underlined that India will be able to hold fiscal deficit at 4.4% of GDP for FY26, despite the crisis
IDBI Bank sale has been called of due to the bids being unviable for the seller	The government was planning to sell a 60.72% stake, including its own stake and the stake held by Life Insurance Corp However, both the bids received from Fairfax of Canada, and Emirates were below the Reserve Price fixed for the sale
New liquidity coverage ratio (LCR) norms to help banks boost credit by 7%	Under the new norms, banks will be able to use the surplus funds parked in the balance sheet to give loans to borrowers This shift is likely to make credit growth more aggressive and eventually bring about a balance in the credit-deposit ratio

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