Mumbai: Foreign portfolio investors (FPIs) have turned sellers in Indian equities in September, withdrawing Rs 14,474 crore through stock exchanges up to September 12, reversing the positive flows seen during July and August. The renewed selling comes as escalating tensions in the Middle East, surging crude oil prices and concerns over inflation and interest rates weigh on investor sentiment.
Primary Market Still Attracts FPIs
Despite selling through exchanges, foreign investors continued to deploy money in the primary market. FPI investment through the primary market stood at Rs 1,336 crore up to September 12. This took their total primary-market investment so far this year to Rs 47,183 crore, according to exchange data, indicating continued interest in new equity offerings. Nifty Extends Losing Streak Indian equities remained under pressure during the week, with the Nifty 50 recording its fifth consecutive weekly decline. Selling was broad-based as most major sectors ended lower. Crude oil emerged as a major concern after escalating Middle East tensions pushed prices sharply higher. Brent crude has climbed above USD 108 a barrel, raising worries about India’s inflation outlook and economic growth. Higher oil prices are particularly challenging for India because of the country’s heavy dependence on crude imports.
DIIs Provide Support
Foreign institutional investor selling remained an important drag on domestic equities. However, domestic institutional investors (DIIs) helped cushion the decline. DIIs recorded net purchases of Rs 6,419.46 crore during the previous week, providing support to the market amid continued foreign selling. FPI flows in the coming sessions are expected to remain closely linked to developments in the Iran-US conflict and their impact on crude prices. Persistently elevated oil prices could increase inflationary pressures and strengthen expectations of tighter monetary policy globally, potentially pushing bond yields higher. Indian equities are therefore likely to remain sensitive to Middle East developments, crude oil prices and changing expectations around US monetary policy in the week ahead.
