This reflects a sharp deterioration in foreign sentiment towards Indian markets amid macroeconomic headwinds and persistent global uncertainty.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, FPIs not only continued their selling spree in the week ended January 23 but also intensified it. The sustained outflows have wiped off Rs 16 trillion in market capitalisation for the week alone, contributing to a 2.5% decline in the Nifty index.
Sentiments, he notes, remain fragile due to a combination of factors including the sustained depreciation of the rupee, weak Q3 earnings, and the absence of progress on the US-India trade deal.
A key driver behind this aggressive FII selling, Vijayakumar explains, has been the sharp slide in the rupee, which touched Rs 91.96 to the US dollar on January 23.
Market participants are concerned that delays in finalising the US-India trade agreement could widen India’s trade and current account deficits, further weakening the rupee and adding to macroeconomic pressure.
In his view, for FII confidence to return, two conditions need to be met: corporate earnings must improve, and clarity must emerge on the US-India trade pact. While some visibility exists on the former, with Q4 FY26 likely to show better numbers, he notes that there is no visibility at all on the timeline for the trade deal — a factor he describes as “the biggest uncertainty weighing on the market now.”Also read: Silver breaches $100/oz: Is the white metal’s best yet to come?
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
