FPIs maintain intense selling in Indian stocks in April as geopolitical tensions dampen investor sentiments

Foreign portfolio investors (FPIs) maintained intense selling in Indian stocks this week, totaling net outflows of ₹23,801 crore, as international instability and climbing crude oil costs dampened investor confidence.

As per data from the National Securities Depository Limited, FPIs previously liquidated equities worth ₹117,775 crore during March, representing the peak level of selling seen this year.

This persistent divestment trend has been primarily fueled by the lingering West Asia conflict, which shows no definitive signs of cooling down.

The spike in crude oil valuations and the softening of the rupee have placed additional strain on Indian indices, encouraging foreign stakeholders to trim their positions.

Analysts observed that heightened geopolitical threats, increasing energy costs, and currency devaluations have fostered a challenging climate for overseas capital.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that March experienced record-breaking liquidations by FPIs.

"March witnessed massive selling by FPIs. This is the biggest ever monthly selling by FPIs. Continuation of the war, crude again spiking to above USD 100 level, the steady decline in the rupee and appreciation of the dollar triggered this record selling by FPIs," he said.

He further mentioned that currency volatility has served as a primary driver in speeding up these capital exits.

"Rupee depreciated by about 4% since the war began and fears of further depreciation has added to the weakness of the rupee, which, in turn, is triggering further selling by FPIs," Vijayakumar said.

The escalation in crude oil prices, specifically crossing the $100 per barrel threshold, has magnified worries regarding inflation and India's import expenses, considering the nation's reliance on foreign energy.

This has also added to the weight on the rupee and general market mood.

Despite the ongoing sell-off, specialists suggest that the market retracement has brought valuations to more sensible levels.

The pattern shows that global elements, especially political friction and fuel price shifts, are presently dictating foreign investor actions in India.

Domestic equity markets were closed on Friday, April 3, for Good Friday.

On Thursday, the stock markets recovered from early losses and ended the session in the green, reflecting resilience in investor sentiment despite global uncertainties.

The Nifty 50 index closed at 22,713.10, gaining 33.70 points or 0.15%, while the BSE Sensex settled at 73,319.55, up by 185.23 points or 0.25%.

Markets had opened on a weak note amid rising geopolitical tensions. However, a recovery during the day helped indices close with gains.