FPI Selling Set To Ease In India, Stable Rupee And Falling Crude Oil Prices Boost Investor Confidence

Mumbai: Foreign portfolio investors (FPIs) may significantly reduce their selling in Indian markets as economic conditions improve and the rupee remains stable, market experts said on Saturday.

Recent data already points to a moderation in foreign selling. On Friday, FPIs sold equities worth only Rs 1,082 crore in the cash market, indicating that the pace of outflows has eased compared with previous sessions.

Analysts believe a combination of favourable global and domestic developments is helping improve investor confidence towards India.

Falling crude oil brings relief

According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, hopes of a peace agreement between the US and Iran have led to a sharp correction in Brent crude oil prices.

For India, which imports a large portion of its crude oil requirements, lower oil prices are a major positive. A decline in oil prices reduces import costs, helps contain inflation and improves the country's overall financial position.

Market experts say further declines in crude prices could provide an additional boost to the Indian economy.

Stronger rupee supports sentiment

India is currently facing a balance of payments (BoP) deficit of around USD 60 billion in FY27. To address this challenge, the Reserve Bank of India (RBI) and the government have introduced measures aimed at attracting foreign capital.

These efforts have helped the rupee recover from a recent low of ₹96.96 per US dollar to around Rs 95.20 on June 12.

Analysts believe the rupee could strengthen further if crude oil prices continue to soften. A stronger currency generally improves foreign investor confidence and reduces concerns over currency-related losses.

Growth outlook improving

Lower oil prices can also support faster economic growth and reduce inflationary pressures. Analysts note that inflation may remain below the projected 5.1 percent level for FY27 if crude prices continue to decline.

Indian stock markets ended the week on a strong note, breaking a two-week losing streak. While foreign investors are still cautious due to global interest rate uncertainty and inflation concerns, improving macroeconomic conditions are expected to slow FPI selling considerably.

However, market experts believe FPIs may turn aggressive buyers only after the global artificial intelligence investment theme begins to lose some momentum.