Foreign investors’ equity custody levels have dropped sharply, pushing the stock to its lowest level in 14 years, amid sustained selling pressure from overseas investors. Foreign institutional investors (FIIs) have sold over $30 billion worth of Indian equities in the past 14 months, reflecting continued risk aversion toward emerging markets.
The sell-off, however, is not limited to India alone. FII outflows have been even more aggressive across several Asian markets, as global investors reassess exposure due to concerns around higher interest rates, slowing global growth, and geopolitical uncertainties.
Rising bond yields in developed markets and a stronger US dollar have further reduced the attractiveness of equities in emerging economies. As a result, foreign investors have continued trimming their holdings, impacting equity custody levels and stock prices.
Market experts believe that while near-term pressure may persist, domestic institutional investors and retail participation could help cushion the impact of foreign outflows. Any stability in global monetary policy and improvement in risk sentiment may also lead to selective return of foreign capital in the coming months.
