The Foreign Institutional Investors (FIIs) have been on a selling trend in India, with this pattern extending from September into October. However, V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, suggests that this trend may not persist, as the primary trigger for FII selling, which was rising bond yields, has now reversed.
The 10-year US bond yield, which had reached 5 percent on October 19, has started to decline, with a notable drop in the last two days, bringing it down to 4.66 percent as of November 3. This reversal in bond yields is attributed to a subtle dovish commentary from US Federal Reserve chief Jerome Powell, who mentioned that "despite elevated inflation, inflationary expectations remain well anchored." This statement has been interpreted by the market as a sign of the end of the rate-hiking cycle, resulting in the correction of yields.
As a result, it's expected that FII selling in the Indian market will subside, and there may even be a shift towards buying, as investors seek to participate in the rally. Various sectors, including frontline banking, automobiles, capital goods, and mid-caps in IT and real estate, are anticipated to perform well in this context.
(With Agency Inputs)
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