Foreign portfolio investors (FPIs) pulled out ₹31,282 crore from the Indian stock market in just five trading sessions in October, adding to the ₹35,857 crore withdrawn in September, according to NSDL data reported by livemint.com. This accelerated selling reflects growing concerns amid global and domestic economic pressures.
The selling spree by FPIs intensified due to rising inflationary pressures linked to escalating tensions in the Middle East and persistent bond market sell-offs, with US Treasury yields near multi-decade highs. Domestically, poor monsoon rains attributed to El Niño worsened price pressures in India, Asia’s third-largest economy. The Reserve Bank of India joined other major central banks in raising interest rates to combat inflation, further influencing investor sentiment.
Higher crude oil prices, with Brent crude remaining above $100 per barrel, significantly impacted Indian equities by increasing the import bill, inflation risks, and currency pressure. Geopolitical developments, including US President Donald Trump’s rejection of a deal with Iran and Pentagon strike options against Iran, added to market uncertainty. Additionally, rising US Treasury yields and a stronger US dollar contributed to the negative outlook for FPIs in Indian markets.
The ongoing FPI sell-off has coincided with a challenging macroeconomic environment marked by inflation and geopolitical risks. The Reserve Bank of India’s recent rate hikes and global market volatility have played key roles in shaping investor behavior, as documented by NSDL data and market analysis from livemint.com.