Markets – Institutional Investors Maintain Cautious Approach Amid Market Volatility
Markets – Foreign investors continued to reduce their exposure to Indian equities during the past trading week, even as domestic institutions stepped in with strong buying support that helped stabilise the broader market. According to provisional exchange figures, foreign institutional investors sold shares worth nearly Rs 7,570 crore during the week, while domestic institutional investors purchased equities valued at around Rs 16,950 crore.
Domestic Institutions Offset Heavy Foreign Selling
Market data for May so far shows a wider gap between foreign and domestic investment behaviour. Foreign institutional investors have cumulatively withdrawn about Rs 32,230 crore from Indian equities this month. In comparison, domestic institutional investors have invested nearly Rs 56,870 crore over the same period, cushioning the impact of sustained overseas selling pressure.
Foreign investors briefly returned as buyers during Monday’s trading session, bringing in approximately Rs 2,810 crore. However, that trend did not continue for long. During the remaining four sessions of the week, overseas investors turned aggressive sellers and pulled out nearly Rs 10,380 crore from the market.
Pabitro Mukherjee, Associate Vice President of Research at Bajaj Broking, noted that domestic institutional investors remained net buyers throughout all five trading sessions last week, helping maintain market balance despite the ongoing volatility.
Benchmark Indices Witness Sharp Swings
Indian benchmark indices moved within a volatile range throughout the week as investors reacted to mixed global and domestic signals. Trading sentiment remained uncertain across sectors, leading to sharp intraday fluctuations between gains and losses.
The Nifty index traded within a broad band of 23,300 to 23,850 during the week. The index repeatedly tested both upper and lower levels before ending the week at around 23,719, registering a modest gain of 0.3 percent.
Analysts observed that market participants remained cautious amid fluctuating global cues and concerns over macroeconomic conditions. Sector-specific movement and profit booking also contributed to the uneven market trend.
Weak Rupee Continues to Concern Investors
Currency movement remained another major factor influencing investor sentiment. Analysts believe the Indian rupee’s weakness against the US dollar continues to create concerns for foreign investors despite relative resilience in global equity markets.
A weaker rupee increases the risk of imported inflation and reduces the attractiveness of emerging markets for overseas investors. As a result, foreign funds have maintained a cautious stance toward Indian equities in recent weeks.
Market experts stated that domestic institutional buying has become increasingly important in maintaining stability during periods of heavy foreign selling. Insurance companies, mutual funds, and other local institutions have played a key role in absorbing selling pressure from overseas investors.
Global Uncertainty Keeps Market Sentiment Fragile
Investor confidence also remained under pressure due to continuing geopolitical tensions across global markets. Concerns surrounding international conflicts kept crude oil prices elevated, adding to inflation worries for emerging economies like India.
At the same time, a sharp increase in global bond yields added further uncertainty. Rising yields were largely driven by fears that inflation may remain elevated for longer, forcing central banks to maintain higher interest rates for an extended period.
Analysts said these macroeconomic challenges contributed to cautious trading activity across equity markets worldwide. Investors are closely monitoring developments related to US-Iran tensions and movements in oil prices, which are expected to influence institutional investment flows in the coming sessions.
Despite the challenging environment, steady domestic inflows continue to provide support to Indian equities, helping benchmark indices avoid deeper corrections.