Foreign Investors Pull ₹4,784 Crore From Indian Equities Amid Bond Market Volatility

Foreign Portfolio Investors (FPIs) turned net sellers in the Indian equity markets this week, offloading shares worth ₹4,784 crore between May 19 and May 23. The sharp withdrawal comes amid heightened uncertainty in global bond markets, impacting investor sentiment and liquidity flows.  

 

Market Trends And Investment Shifts  

- The total FPI investment in May now stands at ₹13,835 crore, down from ₹18,620 crore recorded in the previous week  

- The most significant sell-off occurred on May 21, when FPIs offloaded over ₹10,000 crore in a single trading session  

- Despite strong inflows on May 19 and 20, the week ended with a net outflow, reducing overall foreign investment momentum  

 

Global Bond Market Influence  

- Analysts attribute the sell-off to turmoil in global bond markets, which has led leveraged funds to pull profits from Indian equities  

- Rising US bond yields and liquidity concerns have prompted FPIs to rebalance their portfolios  

- Experts suggest that the movement of "hot money" rather than fundamental weaknesses in Indian markets is driving the trend  

 

Sectoral Impact And Market Response  

- Index heavyweights witnessed sharp selling, leading to volatility in benchmark indices  

- The gaming of option pricing by FPIs may have contributed to fluctuations in stock premiums  

- Despite the sell-off, domestic institutional investors have stepped in to absorb some of the selling pressure  

 

Historical Investment Patterns  

- FPIs had previously sold stocks worth ₹3,973 crore in March, following net withdrawals of ₹78,027 crore in January and ₹34,574 crore in February  

- April saw a turnaround, with net investments of ₹4,223 crore, but May’s volatility has reversed some of those gains  

- The cumulative net investment by FPIs in Indian equities for 2025 now stands at a net outflow of ₹98,516 crore  

 

With foreign investors remaining cautious amid global economic uncertainty, market watchers will be closely monitoring FPI trends in the coming weeks.  

 

Sources: The Hindu BusinessLine, MSN India, LiveMint.