FPIs turn cautious, withdraw Rs 325 cr from Indian equities so far in April
Synopsis
FPIs have turned cautious as they pulled out Rs 325 crore from Indian equities in the first week of this month owing to relatively high valuations and the upcoming general elections.
However, FPI selling will be limited despite the high US bond yields since the Indian stock market is bullish and has been setting new records consistently, he added.
Smallcase Manager and Senior Research Analyst at Capitalmind Krishna Appala believes that FPIs might return post-elections or upon early signs of a US Fed rate reduction.
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Indian government securities (G-Sec) 10-year yield standing at 7.1 per cent and the US 10-year at 4.3 per cent present a compelling case for FPIs. The risk-reward ratio is prompting them to shift their focus from equities to the higher yields offered by bond instruments in the US and India.
They invested Rs 22,419 crore in February, Rs 19,836 crore and Rs 18,302 crore in January.
JP Morgan Chase & Co, in September last year, announced that it will add Indian government bonds to its benchmark emerging market index from June 2024.
This landmark inclusion is anticipated to benefit India by attracting around USD 20-40 billion in the subsequent 18 to 24 months.
This inflow is expected to make Indian bonds more accessible to foreign investors and potentially strengthen the rupee, thereby, bolstering the economy.
In terms of sectors, FPIs have turned into big sellers in the FMCG segment and buyers in telecom and realty.
Overall, the total inflow for this year so far stood at more than Rs 10,500 crore in equities and over Rs 57,000 crore in the debt market.
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