FPIs pull out Rs 8,000 cr in Oct
Foreign funds turned net sellers in Sept as they offloaded Rs14,767 cr
New Delhi: Foreign Portfolio investors (FPIs) dumped Indian equities worth Rs8,000 crore in the first week of October on the back of dollar appreciation and the steady rise in the US bond yields. This came after FPIs turned net sellers in September and pulled out Rs14,767 crore.
“Before the outflow, FPIs were incessantly buying Indian equities in the last six months from March to August and brought in Rs1.74 lakh crore during the period. Going ahead, FPIs are unlikely to turn buyers in the market soon in the context of the elevated dollar and US bond yields,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
According to the data with the depositories, Foreign Portfolio Investors (FPIs) sold shares to the tune of Rs8,000 crore in this month (till October 6). India continues to be on top of emerging economies in attracting FPI this year, but September witnessed selling and October has begun with the same trend. “The dominant factor impacting capital flows to markets in recent weeks has been the steadily rising US bond yields. The early days of October witnessed a rout in the US bond market, which took the 30-year bond yield to 5 per cent briefly. The benchmark 10-year yield is consistently over 4.7 per cent forcing the FPIs to sell in emerging markets,” said Vijayakumar.
Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, attributed the outflow to economic uncertainties in the US and Eurozone regions, as well as growing concerns about global economic growth. This scenario led foreign investors to turn risk-averse. Additionally, higher crude prices, sticky inflation numbers and the expectation that the interest rate may continue to remain at elevated levels longer than expected would have prompted foreign investors to adopt a wait-and-watch approach, he said.
Further, sub-normal monsoon in India and its impact on inflation is also a concern for the domestic economy, which foreign investors would be cognisant of, he added.
