FPIs Withdraw Rs 24,700 Crore From Indian Equities In January So Far On Rising US Bond Yields

However, the investors remained bullish on the debt market and poured in Rs 17,120 crore during the period under review, official data from the depositories revealed

Sector-wise, FPIs remained sellers in auto and auto ancillary, media and entertainment, and marginally in IT. They bought in oil and gas, power, and selectively in financial services. 

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Foreign Portfolio Investors (FPIs) sold Indian equities worth Rs 24,700 crore so far in the month, due to increasing bond yields in the US. However, the investors remained bullish on the debt market and poured in Rs 17,120 crore during the period under review, official data from the depositories revealed. 

The data showed that as of January 25, the FPIs invested Rs 24,734 crore in Indian equities. Comparatively, the investors infused Rs 66,134 crore in the equities in December and Rs 9,000 crore in November, reported PTI. 

Commenting on the movement, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, noted, “The rising bond yields in the US is a matter of concern and this has triggered the recent bout of selling in the cash market. The rally in global stock markets was triggered by the Fed pivot which saw the 10-year bond yield falling from 5 per cent to around 3.8 per cent. Now the 10-year bond is back at 4.18 per cent which indicates that the Fed rate cut will come only in H2 of 2024.”

Himanshu Srivastava, Associate Director-Manager Research, Morningstar Investment Research India, stated, “FPIs started the new year with a cautious approach opting to book profits in the Indian equity markets as they touched all-time high levels. Moreover, uncertainty over the interest rate scenario also prompted them to stay on the sidelines and wait for further cues, before taking investment decisions with respect to investing in emerging markets like India.”

Experts noted that the bullish stand in debt markets was after JP Morgan Chase & Co. announced in September last year that it would add Indian government bonds to the benchmark emerging market index from June 2024. This influenced the influx in India’s bond markets in recent months. 

In December, FPIs invested Rs 18,302 crore in the debt market, while the investment in November stood at Rs 14,869 crore and Rs 6,381 crore in October.

Vijayakumar also noted that sector-wise, FPIs remained sellers in auto and auto ancillary, media and entertainment, and marginally in IT. They bought in oil and gas, power, and selectively in financial services. 

Notably, the overall FPI flows for 2023 touched Rs 1.71 lakh crore in Indian equities and Rs 68,663 crore in the debt market. At the combined level, the investors poured Rs 2.4 lakh crore into the capital market. This followed a worst net outflow of Rs 1.21 lakh crore in 2022 due to the aggressive rate hikes by the central banks across the world. Prior to the outflow, FPIs invested money in the last three years.