Foreign Portfolio Investors (FPIs) have adjusted their positions in the Indian market, selling ₹5,806 crore worth of equities while witnessing a total inflow of ₹1,525 crore as of November 10, considering various asset classes such as debt, hybrid, debt-VRR, and equities, as per data from the National Securities Depository Ltd (NSDL).
In a deviation from the previous three months of sustained buying, FPIs became net sellers in September and October, primarily influenced by the surge in US bond yields amid ongoing geopolitical tensions in the Middle East.
Factors Contributing to FPI Trends:
US Bond Yields Correction: The recent correction in US bond yields, currently standing at 4.66%, follows the November 1 Federal Reserve policy outcome. The decline was triggered by Federal Reserve Chair Jerome Powell’s dovish commentary, signaling a potential end to the rate-hiking cycle.
Global Market Uncertainty: Despite positive Q2 results and promising prospects for Indian financials, FPIs continue to prioritize the safety of risk-free US bond yields, offering around 4.64% for the 10-year period.
Market Resilience: The Indian market displays resilience amidst various challenges. FPIs face a dilemma, as continued selling may lead to missing out on potential rallies in the Indian market.
Analyst Insights and Market Outlook:
Analysts suggest that the selling streak by FPIs, especially in financials, has made banking stock valuations attractive. Despite uncertainties, there is a growing concern among FPIs that heavy selling might cause them to miss out on potential market rallies. The upcoming general elections could be a catalyst for a market rally, as witnessed in the past.
Heading into Samvat 2080, analysts anticipate the market’s continued outperformance based on strong earnings and a positive economic outlook. Nifty ended Samvat 2079 on a positive note, gaining 9.4%, and analysts expect this trend to persist into the next year.
While FPIs have adjusted their positions amid global economic shifts, the Indian market’s resilience and potential for future rallies suggest a cautious approach. The interplay between global factors and domestic market dynamics continues to shape FPI trends, making it essential for investors to monitor developments closely.
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