FPI investment in April: After being buyers for two consecutive months, foreign investors became net sellers in April and sold shares worth Rs 8,700 crore. This change in stance was seen due to concerns arising from the amendment in the tax treaty with Mauritius and the continuous rise in US bond yields. Foreign portfolio investors (FPIs) made net investments of Rs 35,098 crore in March and Rs 1,539 crore in February, depository data showed. But this trend reversed in April and FPIs made a net withdrawal of Rs 8,700 crore.
The total net investment of FPIs in the Indian stock market in the first four months of the year 2024 has been Rs 2,222 crore and in the debt or bond market has been Rs 44,908 crore. According to the data, FPIs made a net withdrawal of Rs 8,671 crore from Indian equities. Kislay Upadhyay, small-case manager and founder of Fidelfolio, said the outflow of foreign capital was a result of rebalancing after heavy inflows in March, the possibility of short-term gains in long-dated bonds and investors’ ‘wait and watch’ stance ahead of the elections. It is the result of adoption.
Why are FPIs selling?
Himanshu Srivastava, Research Manager and Co-Director, Morningstar Investment Research India, said that the amendment in the tax treaty related to investment coming into India via Mauritius is also a bit troubling for foreign investors. Moreover, weak cues from global markets along with uncertain macro-economic situation and interest rate outlook do not bode well for emerging markets. Apart from this, the rise in commodity prices like oil and high inflation rate in America have reduced the expectations of the Federal Reserve to cut the policy rate. This has led to a rise in bond yields which is attracting FPIs.
This is a positive factor for the stock market
The positive factor is that all the FPI sales in the stock markets are being absorbed by Domestic Institutional Investors (DIIs), HNIs (High Net Worth Individuals) and retail investors. This is the only factor which can dominate FPI selling. Apart from shares, FPIs also withdrew Rs 10,949 crore from the debt market during the month under review. VK Vijayakumar, chief investment strategist, Geojit Financial Services, said, “The reason behind fresh FPI selling in both equity and debt markets is the rise in US bond yields. The yield on US 10-year bonds is around 4.7 per cent, which is very attractive for foreign investors.” Before this withdrawal, foreign investors invested Rs 13,602 crore in March, Rs 22,419 crore in February and Rs 19,836 crore in January. Was. This rise was boosted by the announcement of inclusion of India’s government bonds in the JP Morgan index.
Latest Business News