According to V K Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, a significant trend observed in Foreign Portfolio Investor (FPI) activity involves substantial selling in the Fast Moving Consumer Goods (FMCG) sector, contrasted by considerable buying in the telecom and real estate sectors.
In the realm of US bond yields, there has been notable volatility throughout this year, driven by speculations surrounding potential rate adjustments by the Federal Reserve (Fed). At the outset of the year, the market anticipated six rate cuts in 2024, leading to a gradual decline in yields. However, as the year progressed and the US labor market remained robust, market sentiment shifted to expecting only three rate cuts.
Presently, many analysts speculate that there might be just two rate cuts, likely scheduled later in the year. Consequently, the US 10-year yield has surged to 4.4 percent. This shift is expected to have ramifications on FPI inflows into India in the short term.
Despite the elevated US bond yields, FPI selling is expected to be restrained due to the bullish sentiment prevailing in the Indian stock market, which has consistently been achieving new milestones.
In March 2024, Domestic Institutional Investors (DIIs) registered their eighth consecutive month of inflows, amounting to $8 billion, the highest since April 2020, as reported by Motilal Oswal Financial Services. Additionally, Foreign Institutional Investors (FIIs) also witnessed robust inflows totaling $4 billion during the same period.
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