19 September,2026 02:40 PM IST | Mumbai | mid-day online correspondent
Representational Image. File pic.
Amid the elevated crude oil prices and the US Federal Reserve rate hike, Foreign Institutional Investors (FIIs) continued to be net sellers in the market for the fifth consecutive week, according to analysts.
"On the flows front, FIIs stayed net sellers for the fifth straight week, offloading Rs 7,620 crore. Domestic Institutional Investors (DIIs) extended their buying streak with net purchases of Rs 11,232 crore, which helped the index (Nifty) recover from its mid-week lows," Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking said.
With globally central banks shifting to monetary policy tightening cycle, persistent FII selling sustained pressure on the rupee and capped the market rebound, leaving domestic equities lower for the week, noted Vinod Nair, Head of Research, Geojit Investments.
"A hawkish US Fed, which raised the policy rate by 25 bps to 3.75-4.00 per cent, its first hike since 2023, and signalled that more tightening may be needed as inflation stays elevated. The Bank of Japan also raised its policy rate by 25 bps to a 31-year high of 1.25 per cent amid persistent inflationary pressures," Mukherjee said.
This month, so far, FIIs have sold a net Rs 7,041 crore of equities against DII net buying of Rs 36,219 crore.
"Over the past month, FIIs were net sellers in all five weeks while DIIs remained net buyers throughout," Mukherjee said.
"Going ahead, sustained FII selling and global headwinds are likely to keep markets volatile, though steady domestic institutional buying should continue to limit the downside," he added.
Central Banks across the globe, including Reserve Bank of India, monitor the inflation situation and to contain the inflationary pressure, increase the interest rates. This helps to reduce the liquidity or the money that is readily available in the market, thus reducing the spendings and in turn the inflation. However, this move affects businesses as funding is not readily available and the cost of borrowing becomes higher. So, the central banks while adopting a hawkish stance prioritise price stability over short-term economic growth.
The higher interest rate in US may tempt foreign institutional investors to park their funds over there rather than investing it in developing economies like India. Normally FIIs infuse massive capital in the equity market through their bulk buying and the withdrawals could lead to sharp corrections in a domestic market.
The domestic equity benchmark indices extended their losses for the sixth straight week amid elevated crude oil prices, US-Iran conflict, and US Federal Reserve rate hike that dampened investor sentiment.
During the week, the 30-share Sensex shed 486.80 points or 0.65 per cent, while the 50-share NSE Nifty slipped 51.70 points or 0.22 per cent.
On Friday, the Sensex declined for the second consecutive day and dipped 19.63 points, or 0.03 per cent, to settle at 74,294.96. The Nifty extended its gains for the third straight, gaining 75.80 points, or 0.33 per cent, to end at 23,346.40.
