Daijiworld Media Release - Mumbai

Mumbai, Feb 10: The selling spree by Foreign Portfolio Investors (FPIs) in Indian equities persisted, with withdrawals exceeding Rs 7,300 cr (approx. $840 million) in the first week of February, driven by global trade uncertainties and a depreciating rupee.

This follows a massive outflow of Rs 78,027 cr in January, reversing the Rs 15,446 cr investment seen in December, as per depository data. Experts suggest market sentiment will be shaped by global macroeconomic cues, domestic policies, and currency fluctuations in the coming weeks.

According to market analysts, the imposition of US tariffs on Canada, Mexico, and China has heightened fears of a trade war, triggering risk aversion among global investors. Additionally, the Indian rupee hit a record low of Rs 87 against the US dollar, further diminishing returns for foreign investors.

“The strengthening of the dollar index and high US bond yields continue to put pressure on FPIs, though a softening trend in these factors could slow down the selling,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services. He added that improving sentiment post-Budget and the RBI rate cut could offer some relief, while BJP’s victory in the Delhi elections may provide a short-term boost.

Despite the selloff in equities, FPIs showed interest in the debt market, investing Rs 1,215 crore under the general limit and Rs 277 cr in the voluntary retention route.

With net FPI inflows at a meager Rs 427 cr in 2024 so far, investors remain cautious, closely tracking inflation data, global market trends, corporate earnings, and Fed policy cues.

"Key macroeconomic data releases, including India’s inflation and industrial production figures on February 12, will be closely watched, along with US inflation data and Fed Chair Jerome Powell’s testimony," said Puneet Singhania, director at Master Trust Group.