In March and February, FPIs were net buyers at Rs 35,098 crore and Rs 1,539 crore after selling shares worth Rs 25,744 crore in January. On the net basis, they are still buyers at Rs 4,589 crore, so far in this year.
April will have two more trading sessions on April 29 and April 30.
The outflows have been triggered by US inflation which has remained moderately up in March creating concerns that the US Federal Reserve could keep interest rates elevated for longer. This also throws a spanner on Street’s hopes of likely rate-cut in June.
The Federal Open Market Committee (FOMC) will meet on Tuesday for its monetary policy deliberations and will come out with the outcomes on May 1, 2024. It is most likely to leave interest rates unchanged. Commenting on the current FPI trends, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that in April through 26 the selling in equities and debts was on account of sustained rise in US bond yields. The 10-year bond yield now stands at around 4.7% which is hugely attractive for foreign investors, he said. “The latest core CPI inflation in the US jumped to 3.7% against the expectation of 3.4%. This means the prospects of early rate cuts by the Fed are receding. This will keep yields high triggering more FPI outflows in both equity and debt,” he opined.Seeing a silver lining, the analyst said that the FPI selling in the equity markets is getting absorbed by DIIs, HNIs and retail investors.Amid high volatility, the headline index Nifty ended with 1.3% gains on the weak-on-weak basis. It will be a truncated trading next week with Indian equity markets remaining shut on May 1, Wednesday
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