..... . VALI disclosures . .....: 07/06/26, The FII outflows from Indian equity markets continue.

Sunday, June 7, 2026

07/06/26, The FII outflows from Indian equity markets continue.

Foreign Portfolio Investors net sold Rs 42,927 crore worth of equities in the first week of June alone. Experts believe a convergence of global capital rotation toward artificial intelligence opportunities and a sharply weaker rupee continued to erode the investment case for India.

The week’s outflows take total FPI selling in 2026 to Rs 2.67 lakh crore exceeding the full-year figure of Rs 1.66 lakh crore recorded in 2025, according to National Securities Depository Ltd (NSDL) data.

The scale of the exit is significant: India is no longer just facing a pullback, it is absorbing a structural reallocation of global money.

Depreciating rupee adds to loss

For a dollar-denominated investor, Indian equities are now a losing proposition on two counts. The rupee has fallen nearly 6% this year and around 10% over the past 12 months, sliding from the mid-80s to roughly 95.50 against the US dollar, despite Reserve Bank of India interventions.

The rupee is central to the story. When a foreign investor buys Indian shares, the final return is not only about whether the stock rises. It is also about what happens to the rupee. If the currency weakens, dollar returns get hit.

This creates a difficult loop. Equity outflows put pressure on the rupee. A weaker rupee then makes Indian equities less attractive for dollar investors.

SpaceX IPO drives liquidity wave: Analysts

“Apart from higher US yields and dollar strength, global investors are also reallocating capital towards some of the largest technology and AI-related public market opportunities currently emerging globally,” Rajesh Singla, Founder of Alpha AMC told PTI.

The upcoming SpaceX IPO and anticipated capital market activity around leading AI companies, he noted, are drawing significant global liquidity, creating a temporary but sharp rotation away from emerging markets including India.

Reuters reported that SpaceX’s IPO is expected next week, with the company aiming to raise $75 billion at a valuation of $1.75 trillion, making it one of the biggest listings being watched by global investors.

That does not mean AI alone is responsible for the FPI selloff in India. It is better read as one part of a larger rotation. India is facing rupee pressure, high oil-related macro risks, and concerns over earnings growth.

How the year has unfolded

FPIs have been net sellers in every month of 2026 except February, when a brief Rs 22,615 crore inflow, the largest in 17 months raised hopes of a reversal.

However the position of FPIs switched quickly following the initiation of a larger war between Iran and the alliance of US-Israel. March saw a record single-month outflow of Rs 1.17 lakh crore. April brought Rs 60,847 crore in net selling.

May added another Rs 32,963 crore. June is already on track to extend the streak.

RBI, policymakers jump in to encourage investment

The government and RBI have moved to attract overseas capital, but the most immediate policy push is in the bond market.

The government has announced tax exemptions on interest income, long-term capital gains and short-term capital gains for foreign investors in government securities, along with expansion of the Fully Accessible Route for certain government securities.

A note published by the government earlier this week said that the measures are aimed at attracting stable long-term foreign capital, deepening the G-Sec market and strengthening India’s debt market.

RBI also kept the repo rate unchanged at 5.25% on June 5 and announced steps to support the rupee, including concessional forex swaps and compensation to banks for hedging costs on three-year and five-year foreign currency non-resident deposits.

There is already a small but important contrast between equity and debt flows. While FPIs sold Indian equities in the first week of June, they invested over Rs 2,600 crore in debt through the Fully Accessible Route, taking the total to Rs 17,230 crore so far in 2026, according to PTI.

These are meaningful interventions, but market strategists are cautious about their near-term impact. “A sustained revival in FPI inflows would depend on a moderation in the global AI-driven investment theme,” V K Vijayakumar, Chief Investment Strategist at Geojit Investments told PTI.

“There are early signs of this happening. The sharp decline in the Nasdaq on June 5 indicates that the AI trade may be losing momentum. If the AI-driven rally cools and reverses, it could trigger a reversal in FPI outflows from India,” he added.

Article by Surya Agarwal for FinancialExpress

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Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

✳Reality Tips to Traders

1)Trading in the stock market is a marathon. 2)Protecting your capital is key. (Learn to protect first) 3)Making 0 on the day is better than losing 50k 4)Losses happen; they are part of this business. 5)It’s not you vs. the market. It’s you VS you. 6)You are your biggest enemy; learn to be mentally disciplined. 7)Don’t follow the majority; follow the correct path. 8)Traders without a stop loss end up not being traders for long. 9)There is always another trade. 10)The big money is made waiting for the right set-ups. 11)Waiting for the right trade is the most powerful strategy. 12)It is better to cut a loss than to wait to be proven right. 13)Position sizing can make or break you. 14)Worry about the downside before you even think about the upside. 15)Don’t listen to headlines

..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

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