Indian benchmark indices are under pressure as foreign investors offload equities amid rising US bond yields. The market is witnessing its longest weekly losing streak in 25 years. While defensive sectors like IT and private banks show some resilience, selling remains heavy across auto and realty stocks as global capital moves toward safer assets.
The Indian stock market has continued its downward trend, with both the Sensex and Nifty facing a prolonged period of weakness. The indices are now heading toward an eighth consecutive weekly decline, a historic slump that has not been seen in the last 25 years. This sentiment is primarily driven by consistent and heavy selling from Foreign Institutional Investors (FIIs), who have offloaded over ₹20,000 crore in the last two trading sessions alone.
The core reason for this exodus is the rise in US 10-year bond yields, which have climbed to 5.3%. When yields in the United States rise, dollar-denominated assets become more attractive to global investors compared to equities in emerging markets like India. As a result, capital is flowing out of Indian stocks and into safer, fixed-income options in the US, putting significant pressure on domestic indices.
Market breadth highlights a clear division in how different sectors are reacting to this liquidity crunch. Defensive sectors, particularly IT and select private banks, have managed to hold their ground and show signs of resilience. These companies are often viewed by investors as safer bets during times of economic uncertainty. In sharp contrast, the Nifty Auto, Realty, Cement, and Healthcare indices are facing aggressive selling. Investors typically move away from these sectors when they want to reduce risk, as they are often more sensitive to domestic demand and economic cycles.
While equity outflows remain the dominant concern, there is a minor source of relief in the energy market. Brent crude oil prices have fallen below the $100 per barrel mark. For an economy like India, which imports a large portion of its oil, lower energy costs can help stabilize inflation and support corporate profit margins. However, the current intensity of foreign selling is overwhelming this positive signal, as the fear of a broader global capital reallocation takes precedence over local economic factors.
Looking ahead, the primary concern for market observers is the reliance on domestic institutional support. While domestic investors have been acting as a buffer by buying into the dip, the market remains sensitive to whether this support can hold if foreign selling persists. Investors will likely track the trajectory of US bond yields and the intensity of FII flows closely in the coming days. If the US yield remains at these elevated levels, the pressure on emerging market equities is expected to continue.