A report by DSP Asset Managers has highlighted that if the ongoing sell-off by foreign investors is combined with a sharp rise in crude oil prices, India’s Balance of Payments (BoP) could face significant pressure.

According to the report, foreign inflows, particularly from Foreign Institutional Investors (FIIs) in the equity markets, are not only key drivers of stock prices but also play a vital role in maintaining macroeconomic stability in India. The report stressed that in the event of a sharp increase in oil prices, coupled with large-scale FII sell-offs, India’s BoP could deteriorate rapidly, which would put a strain on the country’s economic balance.