FPIs withdraw ₹13,000cr from Indian markets in a week
What's the story
Foreign Portfolio Investors (FPIs) pulled out ₹12,941 crore from Indian markets in the week ending December 12. The withdrawal was largely driven by a weaker rupee and high US interest rates. The outflow was mainly seen across equity and debt segments, with hybrid instruments witnessing marginal inflows. The rupee traded between ₹89.88-90.37 per US dollar during the week, adding to FPI concerns over currency weakness.
Market impact
Equity and debt markets bear the brunt
The week-long outflow included ₹6,135 crore from equities and ₹6,891 crore from debt markets. On December 10 alone, FPIs withdrew ₹5,386 crore in a single day, the highest for the week. This was primarily due to a cautious global risk environment amid high US interest rates and tighter liquidity conditions. Despite these challenges, primary market activity remained strong in India with expectations of volatile FPI flows ahead.
Investor sentiment
Currency depreciation and domestic equity valuations
The sharp depreciation of the Indian rupee, which has hit record lows in recent weeks, further soured foreign investor sentiment as currency losses eroded dollar-based returns. Additionally, high domestic equity valuations made India less appealing compared to other emerging markets offering better value. This combination of factors contributed to the withdrawal of funds from Indian markets during the week under review.