Mumbai: Foreign investors have sharply increased selling in the Indian stock market. Foreign Portfolio Investors (FPIs) have sold shares worth over USD 11 billion (more than Rs 90,000 crore) in March so far.
This is being seen as the largest monthly outflow ever, showing strong caution among global investors.
Rising US Bond Yields Attract Investors
One key reason behind this selling is the rise in US bond yields. The US Treasury yield has increased by more than 50 basis points and is now around 4.4 percent.
Higher yields make safer investments like bonds more attractive, leading investors to shift money away from equity markets like India.
Weak Rupee Adds Pressure
The Indian rupee has weakened significantly, falling to a record low of 94.82 against the US dollar.
Since the start of the West Asia conflict, the rupee has fallen nearly 4 percent. A weak currency reduces returns for foreign investors, pushing them to exit the market.
Oil Prices and Global Tensions
Crude oil prices have remained high, with Brent crude staying above USD 100 per barrel.
Fears of supply disruption through the Strait of Hormuz have increased concerns. For a country like India, which imports most of its oil, higher prices add economic pressure.
Impact on Indian Markets
The Nifty 50 index has fallen nearly 17 percent in dollar terms this month.
However, valuations have become cheaper, with the market trading at around 17.4 times forward earnings, lower than the five-year average of 20 times.
Outflows Seen Across Global Markets
This trend is not limited to India. Other Asian markets have also seen strong outflows.
Taiwan recorded outflows of USD 23 billion, while South Korea saw selling worth USD 17.4 billion in March.
Outlook Remains Weak
Experts believe that FPI selling may continue in the near term. High oil prices, a weak rupee, and global uncertainty are likely to keep foreign investors cautious.
As per NSDL data, foreign investors held around USD 710 billion in Indian markets as of mid-March, making up about 15 percent of total market value.
