FPI selling at Rs 14,474 crore this month to date, escalating Middle East tensions key trigger

 FPI flows turned negative in September, with Rs 14,474 crore withdrawn through exchanges by September 12, though primary-market investment remained positive. Rising crude prices, Middle East tensions and inflation concerns pressured Indian equities, while DII purchases provided some support 

Mumbai: Foreign portfolio investor (FPI) flows turned negative this month after positive flows in July and August, registering Rs 14,474 crore through the exchanges (up to September 12). However, the trend of FPI investment through the primary market has been continuing in September also as per early indications, according to analysts.

FPI investment through the primary market stood at Rs 1,336 crore (till September 12 this month), taking the total investment through the primary market this year to Rs 47,183 crore, according to the exchange data.

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Meanwhile, Indian equity markets remained under significant pressure during the week, with the Nifty 50 extending its weekly losing streak to five consecutive weeks. Escalating tensions in the Middle East triggered a sharp rise in crude oil prices and intensified concerns over inflation, global interest rates and economic growth. The sell-off was broad-based, with major sectors ending lower during the week.

Crude oil emerged as the dominant headwind for domestic equities, said market participants. Foreign institutional investors remained cautious, with continued FII selling emerging as an important headwind for domestic equities. In contrast, domestic institutional investors (DIIs) recorded net purchases of Rs 6,419.46 crore last week, providing a meaningful cushion against foreign selling and helping limit further downside in the domestic equity market.

Going forward, FPI flows will be significantly influenced by the Iran-US conflict and the consequent impact on crude prices. Elevated crude prices ( Brent is above $108) and higher inflation implies tighter monetary policy, which means bond yields will rise further, said analysts.

Global macroeconomic and geopolitical risks are likely to keep Indian equities on edge in the week ahead, with crude oil prices, developments in the Middle East and shifting expectations for U.S. monetary policy emerging as the key drivers of market sentiment.