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% to around 3.8%. Now the 10-year is back at 4.18% which indicates that the Fed rate cut will come only in H2 of 2024, he said
New Delhi:
Foreign portfolio investors have been aggressively selling Indian stocks, turning net sellers in the Indian equity market so far in January 2024, after making a beeline to accumulate domestic stocks during the past two months–November and December. The latest data available from the National Securities Depository Limited (NSDL) showed that the FPIs sold Indian stocks worth Rs 24,734 crore in January.
“So far in January, equities experienced FPI outflows as investors exercised caution on Ems (emerging markets), partly in response to rise in US yields,” CARE Ratings said in a report.
“However, FPI inflows in debt have sustained, supported by India’s inclusion in JP Morgan bond index and potential inclusion in Bloomberg EM Local Currency indices, and have largely offset the equities outflows,” CARE Ratings added.
The selling of stocks by FPIs lately has led to some corrections in Indian benchmark stock indices. In December, especially, they made a beeline to invest in Indian stock markets, with a cumulative accumulation of Rs 66,135 crore.
To put it into context, the entire year saw an inflow of about Rs 171,107 crore, and notably, over one-third of it came in December. The strong inflow of funds from foreign portfolio investors (FPIs) had then supported the benchmark stock indices to march towards all-time highs. In November, the FPI inflow was Rs 9,001 crore, NSDL data showed.
FPIs were sellers in autos and auto ancillary, media and entertainment and marginally in IT. They bought oil and gas, power and selectively in financial services, said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
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% to around 3.8%.
Now the 10-year is back at 4.18% which indicates that the Fed rate cut will come only in H2 of 2024, he said.
As per a report by Kotak Institutional Equities, listed funds witnessed inflows of $2 billion, completely led by ETF inflows. India-dedicated funds witnessed inflows of $3.1 billion, broken down into $2 billion of ETF inflows and $1.1 billion of non-ETF inflows, whereas GEM funds saw $247 million of outflows, led by $337 million of non-ETF outflows, offset by $90 million of ETF inflows.
Before November, FPI participation in Indian stocks was lukewarm, and they had turned net sellers. They sold Rs 14,768 crore and Rs 24,548 crore, in September and October, respectively. Before that, FPIs bought Indian stocks worth Rs 7,936 crore, Rs 11,631 crore, Rs 43,838 crore, Rs 47,148 crore, Rs 46,618 crore, and Rs 12,262 crore in March, April, May, June, July, and August respectively, data showed.
Listed emerging market fund flows were mixed. South Korea, Indonesia and Taiwan witnessed $3 billion, $262 million and $76 million of outflows, respectively. China, India and Brazil saw $10.8 billion, $2 billion and $186 million of inflows, respectively. Total FPI and EPFR activity showed divergent trends for Indonesia, South Korea and Taiwan.