FPIs offload ₹20,000 crore in Indian equities in 4 sessions amid rising Iran-Israel tensions, hawkish Fed

Amid escalating tensions in the Middle East and a substantial surge in U.S. bond yields, foreign portfolio investors (FPIs) have divested Indian equities worth over ₹20,000 crore in just four trading sessions. 

On Thursday, FPIs sold ₹4,260 crore, followed by ₹4,468 crore on Tuesday and ₹3,268 crore on Monday. Last Friday (April 12), they offloaded ₹8,027 crore, bringing the cumulative four-day sell-off to ₹20,023 crore, according to National Stock Exchange (NSE) data.

As a result, Indian benchmark indices have witnessed significant declines in recent sessions. Over the past five trading days, both the Nifty 50 and Sensex concluded in negative territory, experiencing losses of 2.85% and 2.9%, respectively.

FPIs selling trend of selling is not confined to India alone; foreign investors are also divesting from stocks in other emerging markets. They perceive safer opportunities with lower risk in assets such as government-backed bonds and gold.

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US bond yields have seen a consistent uptrend since the March inflation data surpassed analysts' expectations. Additionally, the US economy displayed strength with retail sales surging 0.7% in March, exceeding the anticipated 0.3%, indicating resilient consumer spending despite interest rates hitting a 23-year high.

Following this, US Fed chair Jerome Powell said that there has been "a lack of further progress so far this year on returning to our inflation goal." He indicated that a tight policy is likely to persist until inflation trends constantly move closer to 2%.

Subsequently, the anticipated timing for the first-rate cut has shifted from the previously anticipated June date.

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Meanwhile, the recent release of manufacturing activity in the U.S. Mid-Atlantic region expanded by the most in two years in April on the strength of new orders and shipments of finished goods, although factory employment continued to fall, which showed strength in the U.S. economy, as per the media reports.

"The sharp spike in US bond yields triggered big FII selling which touched ₹4,260 crore yesterday. More FII selling can be expected in the near-term putting pressure on large Caps. Investors may wait for clarity to emerge on the geopolitical front. Uncertainty is very high," said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Also Read: Nifty 50, Sensex drop nearly 1% amid escalating tensions in Middle East

FPI selling also impacted the Indian rupee as it plummeted to a another historic low of 83.83 against the US dollar in today's trading session. 

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.