Foreign Portfolio Investors (FPIs) withdrew Rs 3,776 crore from Indian equities in February so far, amidst a surge in the US bond yields and uncertainty prevailing regarding the interest rates on the global and domestic front. The investors maintained a cautious stance on the equities, however, they remained bullish on the Indian debt market, official data from the depositories revealed.
The investors poured in Rs 16,560 crore in the debt market in the month till February 16, 2024, reported PTI. The dumping in the equities market followed the investors offloading equities worth Rs 25,743 crore in the preceding month. Now, the overall outflow in the current fiscal year has touched Rs 29,519 crore.
Elaborating on the investments, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “The spike in US bond yields triggered by the higher-than-expected consumer price inflation led to sustained selling by FPIs.” The expert added that FPIs would have indulged in more selling in equity due to the increase in US bond yields. However, he noted, “FPIs have been consistently losing the tug of war with DIIs and, therefore, they are a bit reluctant to press aggressive selling. They will have to buy the same stocks later, which they have been selling when conditions are favourable for buying.”
Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, noted, “Also, the latest selling could be attributed to the uncertainty surrounding the interest rate environment, both domestically as well as globally.” Srivastava credited the consistent bullish stance in the debt markets to JP Morgan including the Indian government bonds in its index, adding a boost to the country’s economy.
This development followed investors pouring in Rs 19,836 crore in the debt markets in January, Rs 18,302 crore in December, Rs 14,860 crore in November, and Rs 6,381 crore in October. In 2023, the overall FPI flows touched Rs 1,71 lakh crore in equities and Rs 68,663 crore in the debt markets. Overall, the capital market logged an infusion of Rs 2.4 lakh crore.
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