Indonesian FPI Equity Assets Suffered Greater Losses from US-Iran Conflict than COVID-19 Pandemic

Market Volatility in India: Foreign Investors Flee

Overview Foreign investors have withdrawn significant amounts from Indian markets in recent times, mirroring a similar trend seen during the COVID-19 pandemic six years ago.

Withdrawals Exceed Previous Levels According to recent data, foreign investors have sold $4.5 billion worth of Indian equities in the past year, outpacing the $3.5 billion withdrawn in the corresponding period during the pandemic. This exodus has been attributed to a combination of factors, including rising inflation, interest rate hikes, and a strengthening dollar.

Impact on Indian Markets The sudden withdrawal of foreign capital has led to a decline in the Indian stock market, with the BSE Sensex falling by 8% in the past quarter. This downturn has had a ripple effect on the broader economy, with concerns being raised about the potential impact on economic growth and investor sentiment.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Comparison to Previous Pandemic The current situation bears resemblance to the pandemic-induced market volatility seen six years ago, when foreign investors also fled Indian markets. However, the scale and severity of the current exodus appear to be more pronounced, with implications for the Indian economy and financial markets.