Global Tensions Spark Massive Withdrawal from Indian Equity Market

Foreign investors withdrew INR 21,000 crore from Indian stocks amid global risk sentiment due to the West Asia crisis. Factors like geopolitical tensions, rising crude prices, and rupee depreciation triggered outflows. Despite this, domestic investors and mutual fund SIPs provided some market support.

Foreign investors have dramatically pulled out INR 21,000 crore (USD 2.3 billion) from Indian equities over four days, citing heightened global risk sentiment amid the escalating West Asia crisis. This move follows a temporary boost where FPIs invested INR 22,615 crore in February, marking the highest monthly inflow in 17 months.

The withdrawal is largely attributed to geopolitical tensions, particularly US and Israel's February 28 attack on Iran, escalating conflicts in the region. Market experts highlight rising Brent crude prices over USD 90 per barrel and rupee depreciation, above INR 92 per dollar, exacerbating the global risk-off sentiment.

Chief Investment Strategist VK Vijayakumar and others suggest that the continued pressure on the Indian economy from high crude prices and currency depreciation adds to the uncertainty, influencing FPIs to pull out funds. Despite these challenges, domestic institutional investors continue to bolster the market through steady investments.

(With inputs from agencies.)