Protracted weakness in the rupee could drive a “negative feedback loop on foreign capital flows”, Reuters cited analysts as saying.
New Delhi: Foreign portfolio investors continued heavily selling Indian equities in April, pulling out Rs 60,847 crore as the upward march of crude prices due to the West Asia crisis crimped sentiment on a heavily oil imports-dependent India.
In the first four months of this year, foreign portfolio investors sold some Rs 1.92 lakh crore in Indian equities, PTI reported citing National Securities Depository Limited data, noting that this surpasses the Rs 1.66 lakh crore total sell-off figure for all of last year.
A month earlier, in March – the US and Israel launched their war on Iran on February 28 – investors had sold a record Rs 1.17 lakh crore in equities.
This has in turn put pressure on the rupee which, although shored up a bit by the RBI’s regulatory measures in March, hit a new low of 95.33 to the dollar on Thursday (April 30), amid rising oil prices and hawkish signalling from some members of the US Federal Reserve.
Protracted weakness in the rupee, Reuters cited analysts as saying, “may also drive a negative feedback loop on foreign capital flows by eroding overseas investors’ returns while adding to inflationary pressures by lifting import prices”.
Outflows thus far in 2026 hit financial shares the hardest, with these accounting for Rs 79,981 crore in sell-offs and technology shares coming next at Rs 21,980 crore, the news agency also reported.
“Domestic institutional buying has helped steady markets, with record local purchases of $15.4 billion [Rs 1.46 lakh crore] in March offsetting the highest-ever monthly foreign outflows of $12.7 billion [Rs 1.2 lakh crore],” it noted.
The RBI’s market interventions to support the rupee meanwhile caused its dollar short forward positions to climb up by 34% on the month in March to reach $104.16 billion, marking the first time this figure has crossed the $100 billion threshold, the Financial Express reports.
This article went live on May second, two thousand twenty six, at forty-four minutes past twelve at night.
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