India stocks face selling pressure as foreign investors stay short

Overseas investors have turned more bearish on Indian equities as global risks reduce the market’s appeal. The FII long-short ratio fell to 8% at Thursday’s close, its lowest level since July 23, according to Business Standard. Foreign investors have also withdrawn ₹2.69 trillion from Indian equities this year.

Global pressures are driving the shift. The US-Iran conflict, higher 10-year US Treasury yields, rising Brent crude prices and a weaker rupee have reduced the incentive for foreign funds to add Indian exposure. The Nifty 50 closed at 22,421.95 on Thursday, down 14.25% so far this year.

However, the extreme positioning could trigger short-covering if sentiment improves. Analysts said the Nifty is technically oversold and could rebound toward 22,800-22,850. Still, sustained gains remain difficult without a positive change in crude prices, bond yields or geopolitical conditions. Analysts expect rallies to face selling pressure while the index trades near key support levels.