Foreign investors withdrew nearly ₹25,000 crore from Indian equities in September, the biggest monthly outflow in six months. Rising US bond yields, high crude oil prices and a weakening rupee created strong headwinds. Analysts say five conditions must go right for inflows to return.
The first is cooling of US bond yields. The 10‑year Treasury yield touched 5.34%, its highest since 2002. Lower yields would make emerging markets like India more attractive.
The second is easing of crude oil prices. India imports most of its oil, so expensive crude raises inflation and widens the import bill. A fall in Brent crude would improve the macro picture.
The third is rupee stability. A falling rupee reduces dollar returns for foreign investors. Stability in the currency would cut risks and encourage inflows.
The fourth is strong corporate earnings. Robust quarterly results can reassure investors about growth prospects and offset global pressures.
The fifth is attractive valuations. Elevated valuations have been a concern. Any correction or earnings‑led improvement could make Indian equities more compelling.
Experts believe if bond yields, oil and rupee pressures ease, India’s resilient growth and strong earnings could again draw foreign investors. The Reserve Bank’s upcoming policy decision will be closely watched for signals on inflation and currency stability.