FPIs withdraw ₹21,000 crore from Indian markets in 4 days:Iran-Israel war weighs on sentiments; oil crosses $92; rupee at all-time low

Foreign Portfolio Investors (FPIs) are heavily selling in the Indian stock market. Due to rising tensions in West Asia and deteriorating global risk sentiment, foreign investors have withdrawn about Rs 21,000 crore from the market in the last trading week, i.e. 4 trading sessions. This selling occurred during the first week of March from March 2 to 6. The Indian market was closed on March 3 for Holi. Notably, in February, FPIs invested Rs 22,615 crore in the Indian market, which was the highest in the last 17 months. Impact of War and Rising Crude Oil Prices According to market experts, the biggest reason for the selling is the increasing geopolitical tension in West Asia. The conflict in the region has intensified after the US-Israel attack on Iran on February 28. Brent crude oil prices have crossed $92 per barrel due to fears of supply disruption in the Strait of Hormuz. India imports most of its oil needs. In such a situation, expensive crude oil is considered negative for the Indian economy. Rupee crosses level of 92 against dollar One major reason for foreign investors’ selling in the market is also the fall in the Indian rupee. The rupee has crossed the level of 92 against the dollar. When the rupee weakens, foreign investors get lower returns in dollars, so they start shifting money from emerging markets to US Treasury and dollars which are considered safe. Market under pressure due to these 4 reasons Domestic Investors Stabilized the Market Despite such large selling by foreign investors, Indian markets have not completely crashed. This is due to Domestic Institutional Investors (DIIs). The monthly Systematic Investment Plan (SIP) inflows in mutual funds have supported the market. Due to retail investors’ confidence, the market decline has remained limited. Will the market fall further? Geojit Investments’ Chief Investment Strategist VK Vijayakumar says that until geopolitical conditions improve and crude oil prices decrease, FPI return will be difficult. Morningstar Investment Research India’s Himanshu Srivastava said that due to global uncertainty, investors are currently looking for safe assets.