Concerns Over Valuations and US Bond Yields continue to influence FPIs to Withdraw from Indian Equities. Foreign portfolio investors (FPIs) have been making significant withdrawals from Indian equities, citing concerns about elevated valuations and the recent surge in US bond yields.
This trend has intensified, particularly following the less-than-expected earnings report from HDFC Bank (NS:HDBK).
Contrasting Investor Trends: Indian Debt Market Gains FPI Interest Amidst Equity Sell-Off
While the equity market grapples with FPI sell-offs, there is a noticeable shift in the Indian debt market where FPIs are displaying a growing interest. The outflow from Indian equities ranges between Rs 13,000 crore and Rs 16,455 crore, coinciding with a period of rising US bond yields, which tends to decrease the allure of stocks, especially in emerging markets.
Yield Dynamics: US Bond Yield Increase Spurs FPIs to Favor Indian Debt
The climb in US bond yields, from 3.9% to 4.15%, has negatively impacted the attractiveness of stocks in India. However, this rise has made Indian debt more appealing to FPIs, and Investors resulting in an investment of Rs 15,647 crore in this asset class.
Information Technology Sector Bucks the Trend with Increased FPI Investments
Despite the broader equity market challenges, there is a discernible positive trend in FPI investments, particularly in the information technology (IT) sector. Post third-quarter reports, the IT sector has experienced a boost in FPI interest, showcasing a more selective approach by foreign investors.
