Foreign portfolio investors (FPIs) have sparked concerns with their massive sell-off in the Indian cash market, resulting in a significant decline in capital flows. According to analysts, FPIs turned net sellers due to the strength of the US dollar index and the high US 10-year bond yield, which are seen as short-term negatives for emerging markets like India.
This month alone, FPIs have sold a staggering ₹14,768 crore in the cash segment, a figure that includes bulk deals and investment in the primary market. However, excluding these factors, the total selling figure in the cash segment rises even higher to ₹26,689 crore, highlighting the extent of the sell-off.
Market experts attribute this selling streak to several factors. Firstly, the strength of the US dollar index and the surge in US Treasury yields, hitting a 16-year high mark, have raised concerns about interest rates staying high for an extended period and the potential impact on the global economy. Secondly, high crude oil prices in the last week of September have contributed to FPIs’ cautious behavior.
These developments have led foreign institutional investors (FIIs) to sell ₹25,000 crore in the Indian cash markets this month. With fears over interest rates and the oil market, market sentiment has been negatively affected, resulting in a wave of selling since August.
While the situation is concerning, it is important to note that FPIs are known for their short-term investment strategies. Therefore, it remains to be seen whether this trend will continue or if FPIs will return to the Indian market once conditions stabilize. Market analysts emphasize the need for a balanced view, considering different perspectives and the potential for market fluctuations in the near future.
In conclusion, FPIs’ massive sell-off in the Indian cash market has raised concerns among investors. The current strength of the US dollar index, high US Treasury yields, and escalating crude oil prices have been identified as contributing factors to this trend. However, the situation calls for a balanced perspective, considering that FPIs often adopt short-term investment approaches. The focus now rests on the resilience of the Indian market and whether FPIs will regain confidence in the future.
