Spike in US bond yields spurs FPI outflows
After five months of sustained buying, foreign investors have turned net sellers and pulled out over Rs2,000 crore from the Indian equities in the first week of August, mainly due to Fitch downgrading the credit rating for the US.
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New Delhi After five months of sustained buying, foreign investors have turned net sellers and pulled out over Rs2,000 crore from the Indian equities in the first week of August, mainly due to Fitch downgrading the credit rating for the US.
In addition, the rich and stretched valuations and minor profit booking could be the reasons for this outflow, Yes Securities Chief Investment Advisor Nitasha Shankar said. “A sharp spike in the US 10-year bond yield above 4 per cent is a near-term negative for capital flows to emerging markets,” Geojit Financial Services Chief Investment Strategist VK Vijayakumar said. If the US bond yields remain high, FPIs are likely to continue selling or at least refrain from buying, he added. According to the data with the depositories, Foreign Portfolio Investors (FPIs) withdrew a net sum of Rs2,034 crore from Indian equities during August 1-5. This came after unabated net inflow in the past five months -- from March to July -- following the resilience of the Indian economy amid an uncertain global macro backdrop.
