Oil Price Surge Triggers $3.2 Billion Foreign Investor Exodus From India
Foreign investors are pulling money out of India's stock and bond markets due to rising oil prices. The recent surge in Brent crude above $100 per barrel has triggered a massive exodus from Asian assets, with foreign investors estimated to have sold off $2.1 billion worth of Indian stocks and $1.1 billion in index-eligible sovereign bonds this month.
According to data compiled by Bloomberg, India's assets saw significant inflows in April, May, June, and July after a massive outflow in March. However, with the rise in oil prices again, foreign investors are now pulling money out of Indian markets at an alarming rate.
The renewed rally in oil prices is pressuring the Indian currency, the rupee, which has been one of the worst performers in Asia in the third quarter. Higher oil prices and inflation, along with rising global yields, are triggering renewed investor outflows from Indian assets.
Gautam Chhaochharia, head of global markets India at UBS Group, said that 'oil will be the biggest factor determining whether India sees renewed foreign outflows.' He also warned that high oil prices will limit any meaningful gains in Indian stocks in the coming weeks and months.