Global Funds Snap Indian Stock Selling Streak as Oil Shock Ebbs

Global funds resumed buying Indian equities on May 23, 2024, marking the first net inflow in two months. This shift occurred as geopolitical tensions in the Middle East showed signs of de-escalation and crude oil prices declined. The benchmark S&P BSE Sensex rose 0.5% to 73,900, and the NSE Nifty 50 index gained 0.6% to 22,450. Foreign portfolio investors (FPIs) purchased a net of $176 million in Indian stocks, according to provisional data from the National Securities Depository. This reversal follows a period of sustained selling by foreign investors, who had divested a net of $3.7 billion from Indian equities in the preceding two months. The easing of oil prices, a significant import cost for India, is expected to improve the country's current account deficit and reduce inflationary pressures. Brent crude futures fell below $80 a barrel this week, down from highs near $90 in April. Analysts suggest that a stable oil price environment is crucial for sustained foreign investment inflows into emerging markets like India.