New Delhi, Oct. 13 -- India's equity markets are witnessing a notable shift in investment patterns, with foreign portfolio investors (FPIs) turning net sellers while domestic institutional investors (DIIs) increasingly absorb the selling pressure. Meanwhile, FPIs continue to invest in Indian initial public offerings (IPOs), attracted by potentially more favourable valuations and exposure to emerging sectors.

However, while domestic buying can support equity prices, it cannot directly offset the demand for dollars generated by FPI selling. That demand has been much larger than foreign investment in the primary market, leaving the rupee vulnerable to external pressures. With the US Federal Reserve and the Reserve Bank of India raising poli...