FPIs offload Rs 3,400 cr in just 3 sessions

New Delhi: Foreign Portfolio Investors’ (FPIs) selling spree continues as they pulled out over Rs 3,400 crore from the Indian equity markets in the first three trading sessions of November on rising interest rates and geopolitical tensions in the Middle East.

This came after such investors withdrew Rs24,548 crore in October and Rs14,767 crore in September, data with the depositories showed. Before the outflow, FPIs were incessantly buying Indian equities in the last six months from March to August and brought in Rs1.74 lakh crore during the period. Going forward, this selling trend is unlikely to continue since the main trigger for FPI selling, the rising bond yields, has reversed on the US Federal Reserve signalling a dovish stance in its November meeting.

“The main trigger for this reversal in bond yields is the subtle dovish commentary from Fed chief Jerome Powell that ‘despite elevated inflation, inflationary expectations remain well anchored’. The market has interpreted this statement as the end of the rate hiking cycle,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

According to the data with the depositories, FPIs sold shares to the tune of Rs 3,412 crore during November 1-3. FPIs have been on a selling spree since the start of September. “This could be largely attributed to the growing geopolitical tensions due to the conflict between Israel and Hamas, alongside a notable rise in US Treasury bond yields, “Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Adviser India, said.