FPIs net sellers in August, invest ₹12,262 cr in Indian equities on global cues; When will buying resume?
Foreign portfolio investors (FPIs) emerged net sellers in August with a muted performance on D-Street on rising US bond yields and a stronger dollar, compared to the earlier three months of sustained buying. FPIs bought ₹12,262 crore worth of Indian equities and infused a total of ₹18,338 crore as of August 31, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL ) data. The ₹12,262 crore-figure also includes bulk deals and investment in primary market.
FPIs infused ₹1,259 crore on September's first session, including debt, hybrid, debt-VRR, and equities, with a total investment of ₹1,319 crore, showed NSDL data. In the cash market FPIs sold Indian stocks worth ₹20,620 crore so far this month. Strength in the US dollar index and the US 10-year bond yield remaining high are short-term negatives for FPI flows to emerging markets like India, according to analysts.
Rising bond yields in the US and strong dollar index are negative for capital flows. This was the primary reason why FPIs turned net sellers in the cash market during August. FPIs have been sellers in most emerging markets in August mainly due to this double whammy of rising dollar and rising bond yields.
Profit booking in financials also contributed to FPI selling,'' said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Regarding sector specific investments, analysts observed that FPIs have been consistently buying in capital goods.
Recently, they have been buyers in health care sector as well. Analysts observed that the last FED minutes released were more hawkish than expected. The US 10-year yield is trading at a 16-year high and the 2-year yield is trading at 5 per cent.
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