FPIs extended their selling spree in the Indian stock market in October, withdrawing another ₹31,282 crore in just four trading sessions. This came on top of the ₹35,857 crore worth of selling in September, according to NSDL data.
The severe selling by overseas investors came amid rising inflationary pressures, driven by escalating tensions in the Middle East, while the bond market sell-off showed no signs of slowing, with US Treasuries hovering near multi-decade highs.
Domestic factors also turned unfavourable, with poor monsoon rains linked to El Niño compounding price pressures in Asia’s third-largest economy. The RBI was the latest central bank to raise interest rates, joining the US Federal Reserve, Bank of Japan, and European Central Bank in the fight against rising price pressures.
Higher crude oil prices were among the major reasons behind the increased pressure on Indian equities. For India, higher oil prices are particularly uncomfortable because they simultaneously raise the import bill, inflation risks, and pressure on the currency.
Brent continued to remain above $100 per barrel, while recent media reports showed that the White House had asked the Pentagon to draw up strike options against Iran that could be executed before the midterm elections. US President Donald Trump also said on Wednesday that he no longer wanted a deal with Iran.