According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, FPIs not only continued but also intensified their selling spree in the week ended January 23. The continued outflows have wiped out Rs 16 trillion in market capitalization this week alone, contributing to a 2.5% decline in the Nifty index.
Sentiment, he notes, remains fragile due to a combination of factors, including the continued depreciation of the rupee, weak third-quarter earnings and the lack of progress on the US-India trade deal.
A key driver behind this aggressive FII selling, Vijayakumar explains, was the sharp fall in the rupee, which touched Rs 91.96 against the US dollar on January 23.
Market participants are concerned that delays in finalizing the US-India trade deal could widen India’s trade balance and current account deficits, further weakening the rupee and increasing macroeconomic pressures.
According to him, for FII confidence to return, two conditions must be met: corporate profits must improve and there must be clarity on the US-India trade deal. While there is some visibility on the former, with the fourth quarter of FY26 likely to see better numbers, he notes that there is no visibility at all on the trade deal timeline – a factor he describes as “the biggest uncertainty weighing on the market right now.”Also Read: Silver Surpasses $100/oz: Is the Best of the White Metal Yet to Come?
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
#FPIs #dumping #Indian #equities #worth #sentiment #deteriorate