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News Topical, Digital Desk : Selling by foreign investors in the Indian stock market has intensified. Foreign portfolio investors (FPIs) have sold shares worth nearly $11 billion (over ₹90,000 crore) so far in March, marking the largest monthly outflow ever. According to experts, several global and domestic factors have forced investors to reduce risk:
- US bond yields rise sharply
- Rupee weakness
- Rising tensions in West Asia
- Rise in crude oil prices
US Treasury yields have risen more than 50 basis points since the beginning of March to around 4.4%, making risk-free investments more attractive.
Rupee Weakness Adds Pressure The Indian rupee has fallen to a record low of 94.78 against the dollar, weakening by nearly 4% since the Middle East crisis. A weak rupee reduces returns for foreign investors, leading them to rapidly withdraw funds from the market.
Oil prices and geopolitical tensions have impacted Brent crude prices, which remain above $100 per barrel. Fears of potential supply disruptions through the Strait of Hormuz have increased pressure on energy-importing countries like India.
Impact on Nifty:
Nifty 50 has declined by about 17% in dollar terms this month. However, this has reduced valuations to about 17.4 times based on 12-month forward earnings, which is below the 5-year average of 20 times.
What's next?
Experts believe that FPI selling is unlikely to stop in the near future. According to UBS strategist Bhanu Baweja, high oil prices, a weak rupee, and global uncertainty may limit foreign investment. This
Selling
trend is not limited to India alone. In March, there was a $23 billion outflow from Taiwan and $17.4 billion from South Korea.
Level of foreign investment in India:
According to the National Securities Depository Limited (NSDL), as of March 15, foreign investors held about $710 billion in the Indian market, which is about 15% of the total market.
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