FPIs pull out Rs 12,000 cr from equities Oct so far; invest Rs 5,700 cr in debt
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 worth Rs 12,146 crore this month (till October 20).
This came after 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 bought shares worth Rs 1.74 lakh crore.
The latest outflow appears to be in response to the current global uncertainties.
Geopolitical issues, particularly the conflicts in Israel and Ukraine, have cast shadows of instability over international markets, prompting FPIs to adopt a cautious stance in the Indian equity arena, Mayank Mehraa, smallcase manager and principal partner at Craving Alpha, said.
«The primary reason for the sustained selling was the sharp spike in US bond yields, which took the 10-year yield to a 17-year high of 5 per cent on 19th October, » V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
In the current scenario, experts believe that there could be an enhanced focus on safe-haven assets, such as gold and the US dollar.
Explaining reasons for the Rs 5,700 crore inflow in the debt market, Vijayakumar said this could be attributed to a host of factors such as FPIs diversifying their
