V K Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, highlighted a continuing trend in Foreign Portfolio Investors' (FPIs) investment behavior, noting a pattern of selling in equity and simultaneous buying in debt extending from January into February.
As of February 9, FPIs have reportedly divested equity holdings worth Rs 3,074 crores while acquiring debt instruments worth Rs 15,093 crores. This ongoing trend reflects total equity divestment of Rs 28,818 crores and debt procurement of Rs 34,930 crores in the year 2024 thus far.
Attributing this divergence in equity and debt investment to the Indian market's high valuation and the surge in U.S. bond yields, Vijayakumar emphasized that the January sell-off predominantly targeted financials, with a significant divestment of Rs 31,261 crores. Consequently, there has been a relative underperformance of Bank Nifty and certain prominent private sector banks.
However, Vijayakumar expressed optimism about the long-term potential of banking stocks, signaling value opportunities amidst the ongoing volatility. He also noted FPIs' inclination towards investments in IT and telecom sectors, which have exhibited resilience amid market fluctuations.
Vijayakumar suggested that a reversal in FPIs' equity divestment could occur with a decline and sustained stability in U.S. bond yields, indicating that a shift in market sentiment hinges on external macroeconomic factors.
(With Agency Inputs)