Going ahead, the trajectory of FPIs’ investments in India will be influenced not only by global inflation and interest rate dynamics but also by the developments and intensity of the Israel-Hamas conflict, Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Adviser India, said
Foreign investors have pulled out nearly Rs 9,800 crore from Indian equities this month so far owing to a sustained rise in US bond yields and the uncertain environment resulting from the Israel-Hamas conflict.
This came after Foreign Portfolio Investors (FPIs) turned net sellers in September and pulled out Rs 14,767 crore.
Before the outflow, FPIs were incessantly buying Indian equities in the last six months from March to August and brought in Rs 1.74 trillion during the period.
This inflow was largely due to the reduction in US inflation from 6 per cent in February to 3.2 per cent in July. The temporary pause in the US Federal rate hike from May to August also played a role, Kislay Upadhyay, smallcase manager and Founder of FidelFolio Investments, said.
Going ahead, the trajectory of FPIs’ investments in India will be influenced not only by global inflation and interest rate dynamics but also by the developments and intensity of the Israel-Hamas conflict, Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Adviser India, said.
Geopolitical tensions tend to elevate risk, which typically hurts foreign capital inflows into emerging markets like India, he added.
According to the data with the depositories, Foreign Portfolio Investors (FPIs) sold shares to the tune of Rs 9,784 crore this month (till October 13).
The recent flow trend points towards FPIs adopting a cautious stance towards investing in emerging markets like India.The sustained rise in US bond yields was the principal factor driving the FPI selling, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
Additionally, the prevailing uncertain environment resulting from the Israel-Hamas conflict, which has generated heightened geopolitical tension in the Middle East region also played a main factor in FPIs selling, Morningstar’s Srivastava said.
This development has sparked concerns about potential disruptions in oil-related activities. This could give rise to inflationary shock and FPIs seem to be bracing for it, smallcase’s Upadhyay said.
As Israel engages and prepares for a possibly long-drawn battle, FPIs perceive this as an apt time to book profits and show risk-off after a few months of exuberance, he added.
Meanwhile,the combined market valuation of six of the top 10 valued firms jumped Rs 70,527.11 crore last week, with Reliance Industries Ltd (RIL) emerging as the biggest gainer.While Hindustan Unilever Ltd, Bharti Airtel, ITC, ICICI Bank and HDFC Bank were the gainers, Infosys, Tata Consultancy Services (TCS), State Bank of India and Bajaj Finance emerged as the laggards.
Last week, the BSE benchmark climbed 287.11 points or 0.43 per cent.
The market valuation of Reliance Industries rallied Rs 22,191.43 crore to Rs 15,90,408.31 crore, the most among the top 10 firms.