New Delhi: FPIs have turned cautious as they pulled out Rs 325 crore from Indian equities in the first week of this month due to relatively high valuations due to the upcoming general elections.
There were net outflows of Rs 35,000 crore in MARK and a staggering Rs 1,539 crore in February, depository data showed.
Going forward, V Vijayakumar, chief investment strategist at Geojit Financial Services, said the US 10-year yield rising to 4.4 per cent will impact FPI (foreign portfolio investor) investment flows into India in the near term.
However, despite higher US bond yields, FPI selling will remain limited as the Indian stock market is bullish and continues to hit new records, he said.
Krishna Appal, smallcase manager and senior research analyst at CapitalMind, believes FPIs may make a comeback after the elections or on early signs of reduction in US Fe rates.
According to depository data, FPIs pulled out Rs 325 crore from Indian equities this month (till April 5).“Relatively high valuations and impending general elections have made FPIs cautious, leading them to shy away from aggressive investments in equity markets at this time,” Appala said.
On the other hand, FPIs have made a net investment of Rs 1,215 crore in the debt market during the period under review.
The 10-year yield on Indian government securities (G-Secs) is at 7.1 per cent, while the US 10-year is at 4.3 per cent, presenting an attractive case for FPIs. The risk-reward ratio is leading them to shift their focus from equities to the higher yields offered by bond instruments in the US and India.
Additionally, FPIs have been pouring money into debt markets over the past few months, driven by the inclusion of Government of India bonds in the J Morgan index.
They invested Rs 22,419 crore in February, Rs 19,836 crore and Rs 18,302 crore in January.JPMorgan Chase & Co had announced in September last year that it would add Indian government bonds to its benchmark emerging markets index from June 2024.
This historic inclusion is expected to benefit India by attracting approximately US$20-40 billion over the next 18 to 24 months.
The inflows are expected to make Indian bonds more accessible to foreign investors and potentially strengthen the rupee, thereby boosting the economy.
In terms of sectors, FPIs have become big sellers in the FMCG segment and buyers in telecom and realty.
Overall, total inflows into the equity market so far this year have been over Rs 10,50 crore and into the debt market at over Rs 57,000 crore.
There were net outflows of Rs 35,000 crore in MARK and a staggering Rs 1,539 crore in February, depository data showed.
Going forward, V Vijayakumar, chief investment strategist at Geojit Financial Services, said the US 10-year yield rising to 4.4 per cent will impact FPI (foreign portfolio investor) investment flows into India in the near term.
However, despite higher US bond yields, FPI selling will remain limited as the Indian stock market is bullish and continues to hit new records, he said.
Krishna Appal, smallcase manager and senior research analyst at CapitalMind, believes FPIs may make a comeback after the elections or on early signs of reduction in US Fe rates.
According to depository data, FPIs pulled out Rs 325 crore from Indian equities this month (till April 5).“Relatively high valuations and impending general elections have made FPIs cautious, leading them to shy away from aggressive investments in equity markets at this time,” Appala said.
On the other hand, FPIs have made a net investment of Rs 1,215 crore in the debt market during the period under review.
The 10-year yield on Indian government securities (G-Secs) is at 7.1 per cent, while the US 10-year is at 4.3 per cent, presenting an attractive case for FPIs. The risk-reward ratio is leading them to shift their focus from equities to the higher yields offered by bond instruments in the US and India.
Additionally, FPIs have been pouring money into debt markets over the past few months, driven by the inclusion of Government of India bonds in the J Morgan index.
They invested Rs 22,419 crore in February, Rs 19,836 crore and Rs 18,302 crore in January.JPMorgan Chase & Co had announced in September last year that it would add Indian government bonds to its benchmark emerging markets index from June 2024.
This historic inclusion is expected to benefit India by attracting approximately US$20-40 billion over the next 18 to 24 months.
The inflows are expected to make Indian bonds more accessible to foreign investors and potentially strengthen the rupee, thereby boosting the economy.
In terms of sectors, FPIs have become big sellers in the FMCG segment and buyers in telecom and realty.
Overall, total inflows into the equity market so far this year have been over Rs 10,50 crore and into the debt market at over Rs 57,000 crore.
