According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the surge in US bond yields, driven by higher-than-anticipated consumer price inflation, has spurred continued selling by Foreign Portfolio Investors (FPIs) in the cash market.
During February up to the 16th, FPIs divested equity holdings amounting to Rs 6,112 crores through exchanges. However, investments in 'the primary market and others' mitigated the net selling figure for the same period to Rs 3,775 crores. Overall, in the year 2024, FPIs have offloaded holdings worth Rs 29,519 crores.
This trend of FPI selling is expected to persist as long as US bond yields remain elevated. Concurrently, FPIs have maintained steady buying activity in the debt market since the beginning of the year. In February up to the 16th, FPIs acquired debt securities totaling Rs 16,559 crores, bringing the total for 2024 to Rs 36,395 crores. Vijayakumar anticipates this trend to continue in the near future.
Despite the upward pressure on US bond yields prompting potential for higher FPI selling in equities, Vijayakumar notes that FPIs have been facing stiff competition from Domestic Institutional Investors (DIIs). Consequently, FPIs have refrained from aggressive selling tactics. However, he suggests that FPIs may need to repurchase the same stocks they are currently selling when conditions are more favorable for buying in the future.
Read also |Paytm's QR, Soundbox, and Card Machine to Remain Operational Post March 15; Nodal Accounts Transitioned to Axis Bank
Read also |Global mobility fintech startup Moove raises $10 mn to expand India footprint
