NIFTY 50 fell 2.3% to 18,040 on Friday, a sharper dip than the 1.1% decline seen on Thursday, after FII outflows surpassed $4.5 billion— the largest single‑day exit since March 2024. Adrian Mowat, an investor at Hong Kong SAR, said the sell‑off was driven by a global shift of capital into higher‑yielding US bonds.
Oil prices have rebounded above $100 a barrel, but shipping costs for a 1,000‑tonne container have leapt from $1.50 to $36 per barrel. The spike is squeezing Indian oil marketers and adding pressure on the rupee. Mowat noted that the war in Iran continues to tighten supply chains, keeping freight rates elevated.
The RBI has tapped its record FX reserves to provide dollars to oil companies, a short‑term stopgap that analysts say will not reverse the rupee’s near‑weakest level. Mowat argued that the central bank’s intervention is unlikely to alter the broader trend of a depreciating currency.
US 10‑year yields remain above 5.3%, sitting just below the 1.75% medium‑term premium seen pre‑2007, indicating that bond yields will stay high for the next 12 months. Mowat expects FII inflows to resume only when borrowing costs cool and growth slows. Meanwhile, AI‑related capex is being tempered, but the sector is not seen as a bubble.
Looking ahead, institutional analysts anticipate a 0.5% uptick in NIFTY 50 by the end of the quarter if the rupee stabilizes and shipping costs flatten. The next earnings cycle for major IT and FMCG conglomerates will be closely watched for signs that the market is ready to shift back into equities.