FPIs Pull Out Rs 13,740 Crore in Week Amid West Asia Tensions, Crude Surge

Foreign portfolio investors (FPIs) remained net sellers in the Indian markets during the week ended May 15, pulling out Rs 13,740.89 crore across segments, according to data from the National Securities Depository Limited (NSDL).

The sustained outflows reflect cautious global investor sentiment amid escalating geopolitical tensions in West Asia, rising crude oil prices, and concerns over the weakening rupee.

The selling pressure was largely concentrated in equities, where FPIs withdrew Rs 12,817.11 crore during the week. Market experts believe foreign investors are turning risk-averse as the ongoing conflict in West Asia continues to disrupt global energy markets and increase uncertainty across emerging economies.

India, being a major crude oil importer, remains vulnerable to any sharp rise in global oil prices.

Higher crude prices are expected to widen the country's trade deficit and put additional pressure on the rupee, making Indian assets relatively less attractive for foreign investors.

Why are FPI outflows rising amid rupee weakness against the US dollar?

The rupee's weakening trend against the US dollar has also contributed to the cautious approach adopted by overseas investors. A depreciating currency reduces returns for FPIs in dollar terms, often triggering capital outflows from emerging markets like India.

Debt segments too witnessed outflows during the week. Debt-VRR recorded notable selling activity, while hybrid instruments also saw withdrawals, indicating broad-based caution among global funds.

The week began on a weak note with FPIs recording net outflows of Rs 1,131.77 crore on May 11.

Selling intensified sharply on May 12, when foreign investors pulled out Rs 7,545.99 crore, marking the steepest single-day outflow during the week.

Although FPIs briefly turned buyers on May 13 with inflows of Rs 346.37 crore, the recovery remained short-lived as selling pressure resumed in subsequent sessions. On the final trading day of the week, FPIs infused Rs 1,111.53 crore into equities, helping limit overall losses.

Meanwhile, Prime Minister Narendra Modi recently urged citizens to avoid excessive buying of gold and silver and instead support financial stability measures aimed at strengthening the rupee and reducing pressure on imports.

According to market experts, global uncertainties, elevated crude oil prices, and currency volatility are likely to keep FPI flows volatile in the near term.

(With inputs from ANI)