For the seventh straight trading session on Tuesday, foreign portfolio investors (FPIs) kept selling Indian stocks, taking out an extra Rs 5,729 crore. With the largest single-day selloff on October 4, when FPIs offloaded Rs 15,506 crore, data shows that the cumulative outflow by FPIs over the previous seven days has reached Rs 55,742 crore.
Domestic institutional investors (DIIs) have intervened as net purchasers during the FPI outflow, lessening the market’s impact. In the same seven days, DIIs had invested Rs 60,206 crore in Indian shares. Indian stock markets, while still buying, have not been able to withstand the selloff.
Tuesday saw a minor slowdown in the rate of outflows despite continued FPI selling. Market experts speculate that part of the reason for this slowdown is profit booking in Chinese stocks, which has taken some of the focus away from Indian equities.
Global markets have been affected by growing geopolitical tensions, a major factor in the dramatic FPI selloff. Crude oil prices have surged as a result of the intensifying crisis between Iran and Israel, raising worries about possible inflationary pressures.
Increased oil costs may have a detrimental impact on India’s economy and change investor mood. The relatively high price of Indian stocks has also been a contributing factor in FPIs’ decision to reduce their holdings.
FPIs have started to reroute money to Chinese stocks as a result, expecting that these stimulus measures will lead to a rise in corporate earnings and a rebound in China’s economy. Indian stock markets have been stable despite the continuous flight of foreign institutional investors (DIIs). This stability has been bolstered by the strong engagement of individual investors.
Historically, this pattern of local investment has served to offset the volatility brought on by outflows of foreign capital, guaranteeing the strength of Indian stocks even in the face of uncertainty about the state of the world economy.
