"The spread of coronavirus in the US is a major driving factor and India is witnessing a spillover effect of what is happening in the global markets. There has been a consistent drain of money from Indian equities as well as the debt where FPIs are fleeing the Indian markets amidst fear of an extended slowdown," said Harsh Jain, co-founder and COO, Groww.
The US Fed brought in an emergency rate cut of 50 bps, which shows that the US government is expecting a slowdown, he noted.
As per Jain, the current situation in India, seen along with the Yes Bank crisis, is not very encouraging.
"In the next 3-4 weeks, the coronavirus behaviour in the western world will dictate the investment behaviour by FPIs in India," Jain said.
Echoing the views, Nirali Shah, senior research analyst at Samco Securities, said "The sell-off is certainly the effect of uncertainty caused by rippling effect of coronavirus (COVID-19) in major economies."
Going forward, depending on how the US market reacts to coronavirus and slowdown fears, FPIs will react as the US economy will be the cue for these investors for either bringing in fresh investments or withdrawing from India, Shah added.