Foreign portfolio investors have withdrawn nearly Rs 5,109 crore from Indian government securities in just three days amid global economic uncertainties, higher crude prices, and a softer rupee, highlighting swift shifts in emerging market capital flows.
Foreign portfolio investors have pulled nearly Rs 5,109 crore from Indian government securities in just three days, according to data from the Clearing Corporation of India, underscoring how quickly global bond-market turbulence is reshaping capital flows into emerging markets.
The selling came through the fully accessible route, which lets eligible overseas investors trade selected Indian government bonds without a cap. Holdings in these securities fell to Rs 366,806.286 crore on September 15 from Rs 371,915.496 crore on September 9, after a brief rise and then a sharp pullback over the intervening sessions.
Market participants said the combination of higher crude prices, firmer US Treasury yields and a softer rupee made Indian sovereign debt less appealing. Brent crude has climbed to more than $107 a barrel, while the benchmark 10-year US Treasury yield has moved above 5 per cent, levels that have reinforced selling pressure across global bond markets.
The rupee also weakened, closing at 95.96 against the dollar on Tuesday after sliding 42 paise, adding to the case for foreign investors to reduce exposure. Analysts say such conditions typically favour developed-market assets and can trigger outflows from emerging-market debt, raising borrowing costs and increasing pressure on currencies.
The bond selling fits a broader pattern of foreign portfolio investors reducing India exposure this month. Separate market data show they have also been net sellers of Indian equities in early September, as concerns over global uncertainty, rising oil prices, stronger US yields and dollar strength continue to weigh on risk appetite.
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