According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, Foreign Portfolio Investors (FPIs) continued to divest in the cash market, offloading equity amounting to Rs 27,664 crores up to January 25. Notably, FPIs were net sellers in sectors such as autos, auto ancillary, media, and entertainment, and to a lesser extent, in IT. However, they exhibited a buying interest in oil and gas, power, and selectively in financial services.
The surge in bond yields in the United States has raised concerns and has been a driving factor behind the recent selling spree in the cash market. The global stock market rally was initially prompted by the Federal Reserve's pivot, resulting in a decline in the 10-year bond yield from 5% to approximately 3.8%. However, the 10-year yield has now rebounded to 4.18%, indicating that the anticipated Fed rate cut may not occur until the second half of 2024, as mentioned by Vijayakumar.
A report by Kotak Institutional Equities highlighted that listed funds experienced inflows of $2 billion, predominantly driven by ETF inflows. India-dedicated funds attracted inflows of $3.1 billion, comprising $2 billion from ETFs and $1.1 billion from non-ETF sources. Conversely, Global Emerging Market (GEM) funds saw outflows of $247 million, led by $337 million in non-ETF outflows, partially offset by $90 million in ETF inflows.
The flow of funds into listed emerging markets demonstrated mixed trends. South Korea, Indonesia, and Taiwan experienced outflows of $3 billion, $262 million, and $76 million, respectively. On the other hand, China, India, and Brazil saw inflows amounting to $10.8 billion, $2 billion, and $186 million, respectively. The overall Foreign Portfolio Investor (FPI) and EPFR (Emerging Portfolio Fund Research) activity indicated divergent patterns for Indonesia, South Korea, and Taiwan.
(With Agency Inputs)
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