FPIs turn negative, withdraw over Rs 13,000 crores so far in Jan

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Foreign Portfolio Investors (FPIs), in the first three weeks of January, have withdrawn over Rs 13,000 crore from Indian stock markets, adopting a cautious approach. FPIs have turned sellers due to the high valuation of domestic shares and the increasing returns on bonds in the United States. According to depository data, foreign investors are optimistic about the reverse trend in the bond or debt market. They have invested Rs 15,647 crore in the bond market during the review period.

According to the data, Foreign Portfolio Investors (FPIs) have withdrawn Rs 13,047 crore from domestic stock market in this month (until January 19). Previously, in December, FPIs had invested a net amount of Rs 66,134 crore in shares, and in November, they had invested Rs 9,000 crore.

Vijaykumar V, Chief Investment Strategist at Geojit Financial Services, said, “There are two reasons for the sell-off by FPIs. Firstly, bond returns have risen in the United States. The yield on the 10-year bond has risen from the recent level of 3.9 percent to 4.15 percent, leading to capital outflow from emerging markets

He stated that the second reason is the high valuation of shares in India. FPIs are selling on a large scale, citing weak results from HDFC Bank, as anticipated. Himanshu Srivastava, Associate Director-Manager Research at Morningstar Investment Research India, said that the disappointment with HDFC Bank’s weak quarterly results is a significant reason for the large-scale selling by FPIs. He mentioned that uncertainty about the interest rate scenario has also forced them to stay on the sidelines before investing in emerging markets like India.