India suffers a record-breaking sell-off of shares by foreigners, totaling $1.2 billion, following the escalating conflict in the Middle East which fueled oil prices, impacting energy costs and weakening the rupee.
March 27, 2569 at 13.07:XNUMX a.m., CNBC reported that Foreign investors sold a record amount of Indian stocks in March 2569. Following the conflict in the Middle East, oil and gas supplies were disrupted, leading to higher energy costs, putting pressure on the economy and raising concerns about a slowdown in India's growth.
Information from NSDL Securities Depository Company. specify that Foreign investors have sold approximately 1.12 trillion rupees, or about $12,100 billion, of Indian stocks, and this is on track to be the highest monthly net selling on record, surpassing the previous record of 2567 billion rupees in October 940,000.
Fund manager from Matthews Asia. specify that The massive outflow of foreign capital in March 2569 is directly linked to the conflict in the Middle East, and the longer the war drags on, the more severe the impact on India's economic growth will be.
India's private sector Purchasing Managers' Index (PMI) for March fell to its lowest level since October 2565 due to weakening domestic demand, despite an increase in foreign orders. Companies have cited the war in the Middle East, volatile market conditions, and inflationary pressures as factors impacting business growth, while production costs have risen to near their highest levels in four years.
India, the world's third-largest oil importer and second-largest consumer of liquefied petroleum gas (LPG), is facing rising energy costs and panic buying following tight oil supply due to the closure of the Strait of Hormuz.
Renaissance Investment Managers specify that If oil prices remained at $85-95 per barrel after the war, it could result in an additional $40,000-50,000 billion in capital outflow from India, or more than 1% of GDP, and could reduce India's economic growth to around 6.5% from the current 7.2%.
Analysts from S&P Global Market Intelligence. specify that India is one of the most vulnerable countries to rising oil prices, as net oil imports account for approximately 3.5% of GDP, and persistently high oil prices could lead to a continued weakening of the rupee.
The Indian government has reduced the excise tax on gasoline and diesel by 10 rupees per liter to help alleviate the country's energy cost burden. However, the Indian Energy Minister stated that the government will lose a significant amount of tax revenue to offset the impact on oil companies.
Analyst Also, a warning that... Rising energy import costs, coupled with a potential slowdown in remittances from Indian workers in the Middle East, could widen India's current account and budget deficits and potentially lead to increased capital outflows due to a risk-off investment climate.
Over the past month, India's Nifty 50 stock index has fallen by approximately 7.4%, while the rupee has weakened to new lows against the dollar, despite continued intervention by the Reserve Bank of India. Analysts expect the rupee to remain under pressure as long as global energy markets remain uncertain.
Although Indian stocks have started to become cheaper, analysts believe this is not enough to attract foreign investors back in the short term, as geopolitical uncertainty and risks to the Indian economy remain high.
Data from Nomura also shows that many Asian funds have reduced their weightings in India, with the proportion of funds holding less than normal Indian stocks increasing to 68% from 63% the previous month. Securities firms have indicated that India has become one of the most heavily underweighted stock markets in the region.
refer : www.cnbc.com
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