FPIs Withdraw Rs 4,800 Cr From Equities In Early September
During the first half of September, foreign portfolio investors (FPIs) withdrew around Rs 4,800 crore from Indian equities, citing concerns related to rising US bond yields, a stronger US Dollar, and global economic uncertainties. This trend follows consistent FPI investments in Indian equities from March to August, amounting to Rs 1.74 lakh crore during that period.
Market analysts predict that FPIs may continue shedding their holdings in the coming days, especially since the market currently boasts record-high levels with elevated valuations. The surge in US bond yields, currently at 4.28 per cent for the 10-year bond, along with the strength of the US Dollar (the Dollar Index is above 105), are the primary factors driving this potential sell-off.
Data from depositories reveals that by 15 September this month, FPIs had withdrawn a net sum of Rs 4,768 crore from equities, including bulk deals and primary market investments. This follows a decrease in FPI investment in equities, which hit a four-month low at Rs 12,262 crore in August.
Himanshu Srivastava, Associate Director-Manager Research at Morningstar India, attributes the September outflow to concerns about the global interest rate landscape, particularly in the United States, and worries about global economic growth. These concerns are tied to broader global macroeconomic factors, such as rising crude oil prices and the resurgence of inflation risks. The anticipation of a potential interest rate hike in the US and its potential impact on the global economy has made investors adopt a cautious "wait-and-watch" approach.
In contrast to their equity investments, FPIs have poured over Rs 2,000 crore into India's debt market during the same period. This brings the total FPI investment in equities to Rs 1.3 lakh crore and over Rs 30,200 crore in the debt market for the year thus far.
