FPIs are cautious on stocks; Withdraw Rs 3,776 crore in February so far due to rise in US bond yields | Top Vip News

Foreign investors adopted a cautious approach by offloading Indian stocks worth close to Rs 3,776 crore so far this month due to a rise in US bond yields and uncertainty over the interest rate environment on the front. national and global. On the contrary, they are bullish on the debt market and pumped in Rs 16,560 crore during the period under review, depositories data showed.

According to the data, foreign portfolio investors (FPIs) withdrew a net sum of Rs 3,776 crore from Indian stocks this month (till February 16). This followed a net withdrawal of Rs 25,743 crore in January.

With this, the total outflow for this year has reached Rs 29,519 crore. “The rise in US bond yields triggered by higher-than-expected consumer price inflation led to sustained selling by FPIs,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Additionally, the latest selling could be attributed to uncertainty surrounding the interest rate environment, both domestically and globally, said Himanshu Srivastava, associate director of research at Morningstar Investment Research India. According to Vijayakumar, equity sales by FPIs would have been much higher in response to rising US bond yields.

But FPIs have been steadily losing the tug-of-war with DIIs and are therefore a bit reluctant to push for aggressive sales. Later they will have to buy the same shares they have been selling, when conditions are favorable for buying. On the continued bullish stance in debt markets, Morningstar’s Srivastava mainly attributed it to the announcement of the inclusion of Indian government bonds in the JP Morgan index, along with the country’s relatively stable economy.

This came after a net investment of Rs 19,836 crore in debt markets in January, Rs 18,302 crore in December, Rs 14,860 crore in November and Rs 6,381 crore in October, the data showed. In September 2023, JP Morgan Chase & Co announced that it will add Indian government bonds to its emerging markets benchmark index from June 2024. The move influenced capital inflows into the country’s bond markets in recent months.

Overall, the total FPI flows for 2023 stood at Rs 1.71 lakh crore in equity and Rs 68,663 crore in debt markets. Together, they infused Rs 2.4 lakh crore into the capital market. The flow into Indian stocks came after the worst-ever net outflow of Rs 1.21 lakh crore in 2022 due to aggressive rate hikes by central banks globally. Before the exit, FPIs invested money in the last three years.