Foreign Investors Pull ₹10,000 Crore from Indian Markets in 4 Days
The Indian equity market has witnessed a significant outflow of funds from foreign investors in the first four trading sessions of April. According to a recent report, Foreign Portfolio Investors (FPIs) withdrew a whopping ₹10,355 crore from the Indian equity markets during this period. This massive withdrawal has raised concerns about the impact of global trade tensions on the Indian economy.
The latest outflow of funds from FPIs comes after US President Donald Trump imposed reciprocal tariffs on multiple countries, including India, triggering fears of a global trade war. This move has created uncertainty among investors, leading to a sharp decline in investor sentiment towards the Indian equity market.
In the last six trading sessions of March, FPIs had infused nearly ₹31,000 crore into Indian equities. However, the sudden outflow of funds in the first week of April has raised concerns about the sustainability of the recent rally in the Indian stock market.
The Indian equity market has been on a roll since the beginning of the year, with the benchmark S&P BSE Sensex touching a record high of 39,000. However, the recent outflow of funds from FPIs has led to a decline in investor sentiment, causing the market to correct sharply.
The outflow of funds from FPIs was led by a decline in investments in the banking and financial services sector, which saw a withdrawal of ₹4,451 crore. The technology and pharmaceutical sectors also witnessed significant outflows, with ₹2,341 crore and ₹1,234 crore withdrawn, respectively.
The decline in FPI investments in the banking and financial services sector is attributed to the recent decline in global interest rates, which has reduced the attractiveness of Indian bonds and equities. The decline in FPI investments in the technology and pharmaceutical sectors is attributed to the uncertainty surrounding the global trade tensions.
The outflow of funds from FPIs has also led to a decline in the rupee, which has weakened by 0.3% against the US dollar. The decline in the rupee has made imports more expensive, which could lead to a rise in inflation and put pressure on the Indian economy.
However, analysts are of the view that the recent outflow of funds from FPIs is a temporary phenomenon and that the Indian economy is resilient enough to withstand the impact of global trade tensions. According to a leading analyst, “The Indian economy is not as vulnerable as it was earlier, and the government has taken several steps to improve the situation. The recent outflow of funds from FPIs is a minor setback and the market will recover soon.”
In conclusion, the recent outflow of funds from FPIs is a significant development that has raised concerns about the impact of global trade tensions on the Indian economy. However, analysts are of the view that the Indian economy is resilient enough to withstand the impact of global trade tensions and that the market will recover soon.
