Indian equity markets face FPI outflows amid Middle East tensions

Foreign Portfolio Investors (FPI) have withdrawn 14,474 crore rupees from the Indian equity market between September 1 and September 12. This follows positive inflows recorded during July and August. Despite this outflow in the secondary market, FPI investment in the primary market (IPOs) remains positive at 1,336 crore rupees for the month, bringing total FPI investment in the primary market to 47,183 crore rupees this year.

The Indian equity market, specifically the Nifty 50, has faced significant pressure, marking five consecutive weeks of decline. Analysts attribute this volatility to rising crude oil prices driven by escalating tensions in the Middle East, which have fueled concerns regarding inflation, global interest rates, and economic growth.

While foreign investors remain cautious, Domestic Institutional Investors (DII) provided some stability by making net purchases of 6,419.46 crore rupees last week. Future market trends are expected to be heavily influenced by geopolitical risks involving Iran and the United States, crude oil price fluctuations, and shifts in U.S. monetary policy expectations.