Foreign investors dump ₹5,109 crore from Indian govt bonds in three days

Foreign portfolio investors pulled nearly ₹5,109.21 crore from Indian government securities under the fully accessible route (FAR) between September 9 and September 15, according to data from the Clearing Corporation of India (CCIL). FPI holdings in government securities under FAR declined to ₹366,806.286 crore as of September 15 from ₹371,915.496 crore on September 9.

The pullback reflects deteriorating sentiment among overseas investors grappling with multiple headwinds. Crude oil prices hovering near USD 110 per barrel amid escalating tensions between the United States and Iran have fuelled inflation concerns globally. Simultaneously, US Treasury yields have climbed toward the 5 per cent mark, making dollar-denominated assets increasingly competitive against Indian sovereign debt.

Rupee weakness has compounded the challenge for foreign investors holding Indian assets. The combination of elevated global energy costs, stronger US yields, and currency depreciation has eroded the relative attractiveness of Indian government securities, prompting strategic exits from the debt market.

The FAR mechanism allows eligible foreign investors to buy and sell certain Indian government securities without investment caps, making it a key barometer of overseas confidence in Indian debt markets. The sustained outflows signal that geopolitical uncertainties and shifting global monetary conditions are overshadowing India's economic fundamentals for international investors in the near term.