FPIs Need 5 Things to Return: Cooling Yields, Stable Rupee, and Strong Earnings

Foreign portfolio investors (FPIs) sold over Rs 25,000 crore of Indian shares in September, the highest monthly outflow in six months.

The sharp selling was triggered by higher oil prices and elevated US bond yields, which made dollar assets more attractive to global investors.

To bring back foreign capital, analysts say several factors need to fall into place. Firstly, a cooling of US bond yields is necessary, as the 10-year Treasury yield has climbed to 5.34%, its highest level since 2002.

A decline in yields would signal that emerging markets are once again attractive for foreign investors, and India's appeal can be restored.