Foreign Investors Return After RBI Rate Cut, But Israel-Iran Crisis Sparks Rs 3,275 Crore Outflow

The rate cut by the RBI supported investor confidence and led to strong FPI inflows for the first three trading sessions of the week from June 9 to June 13.

In times of geopolitical tension, such as the ongoing Israel-Iran conflict, investors tend to shift their money to safer assets like gold, which can reduce flows into emerging markets like India.

Source : Freepik

Foreign portfolio investors (FPIs) pumped Rs 3,346.94 crore into Indian stock markets this week, boosted by positive sentiment after the Reserve Bank of India (RBI) announced a rate cut, according to data from the National Securities Depository Limited (NSDL).

The rate cut by the RBI supported investor confidence and led to strong FPI inflows for the first three trading sessions of the week from June 9 to June 13. However, geopolitical tensions between Israel and Iran weighed on investor mood toward the end of the week.

On the last trading day of the week, Friday, FPIs pulled out a significant Rs 3,275.76 crore from Indian equities. This large outflow reduced the net investment figure for the week to Rs 3,346.94 crore.

In times of geopolitical tension, such as the ongoing Israel-Iran conflict, investors tend to shift their money to safer assets like gold, which can reduce flows into emerging markets like India.

Despite the positive inflows during the week, the overall FPI investment trend for June remains negative. So far in June, FPIs have withdrawn Rs 5,402 crore from Indian equity markets, as per NSDL data.

Reserve Bank of India's Monetary Policy Committee (MPC) on June 6th announced a surprise rate cut of 50 basis points. The repo rate was reduced to 5.5 per cent, which gave a strong push to investor confidence.

Earlier in May, the net foreign portfolio investment (FPI) inflows remained in positive and stood at Rs 19,860 crore, making May the best-performing month so far this year in terms of foreign investment.

In previous months' data also showed that FPIs had sold stocks worth Rs 3,973 crore in March. In January and February, they had sold equities worth Rs 78,027 crore and Rs 34,574 crore, respectively. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)