Foreign selling intensifies, Nifty logs steepest slide in years

Indian equities remain under sustained pressure as an unrelenting wave of foreign portfolio investor outflows continues to weigh on benchmark indices. The scale and persistence of selling over the past fortnight have marked one of the most severe episodes of capital flight in recent years, dragging the Nifty 50 into a sharp correction.

Data show that FPIs have withdrawn close to ₹90,000 crore in a span of just over two weeks, a stretch that now ranks among the longest continuous selling streaks seen in the domestic market. The impact has been most visible in frontline stocks, particularly within the financial space, where foreign ownership remains significant.

The Nifty has corrected by around 10 per cent during this period, reflecting both the intensity of outflows and the absence of strong countervailing domestic flows at higher levels. Banking and financial stocks have led the decline, mirroring the concentrated nature of foreign selling. The pressure has also spilled over into broader markets, with midcaps and smallcaps witnessing bouts of sharp volatility.

Global factors have played a central role in shaping investor behaviour. Elevated US bond yields, a firm dollar and rising crude oil prices have collectively reduced the relative attractiveness of emerging market assets. For India, the situation has been compounded by geopolitical tensions that have added another layer of uncertainty to global risk sentiment.

The rupee’s depreciation has further underscored the strain. A weaker currency tends to accelerate outflows by eroding returns for foreign investors, while also raising concerns over imported inflation. This feedback loop has kept market sentiment fragile, even on days when indices attempt a recovery.

Domestic institutional investors have provided intermittent support, but their buying has not been sufficient to offset the scale of foreign selling. As a result, market direction in the near term continues to be dictated largely by external cues and liquidity conditions.

Market participants remain cautious, noting that a durable stabilisation would require a moderation in global yields, some easing in crude prices and, crucially, a pause in FPI outflows. Until such conditions emerge, Indian equities are likely to remain vulnerable to sharp swings, with downside risks continuing to outweigh near-term upside.