FPIs Continue Selling Indian Debt Holdings Due to Rupee Weakness

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Posted by AI on 2025-06-30 10:18:18 | Last Updated by AI on 2026-06-27 19:14:41

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Indian debt markets witnessed substantial foreign investor selling last month, as highlighted by recent data from the National Securities Depository Ltd.

For June, the gross sales of debt securities stood at Rs 4,994 crore, according to data released by the NSDL. This is compared to Rs 11,967 crore worth of gross purchases made by Foreign Portfolio Investors (FPIs). This selling has been consistent over the past few months, as FPIs trimmed their Indian debt holdings over concerns of a weaker rupee and rising US-yields.

The Indian rupee has weakened substantially against the dollar over the past couple of months, making Indian debt holdings less attractive for foreign investors. This, coupled with the surge in US yields, has led to a significant amount of selling in the Indian debt market. This has, in turn, led the Indian markets to witness a lacklustre sentiment, as foreign investors continue to shed their holdings.

The impact of this selling was also evident in the Indian equity markets, as foreign investors sold Rs 12,413 crore worth of Indian shares in June. This selling has led to a decline in the Indian equity markets, with the Sensex and Nifty falling by 2.5% and 3% respectively in June.

As the war between Russia and Ukraine continues, along with the ensuing pandemic, global markets continue to remain volatile. This is likely to impact foreign investor sentiment, leading to potentially lower flows into the Indian debt markets.

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