Reversing the trend of net investments in the previous two months, overseas investors turned net sellers in the capital markets
in October so far.
According to the depositories data
The turnaround comes in wake of depreciation in the rupee and global factors, experts opine. Foreign portfolio investors (FPIs)
have withdrawn Rs 1,472 crore from capital markets on a net basis in the current month so far.
A trend reversal was seen in the debt segment in October from the big buying in the prior two months when FPIs had pumped in Rs 13,363 crore in September and Rs 14,376.2 crore in August. FPIs pulled out Rs 1,698 crore in October so far.
This trend reversal in debt investment is due to the INR depreciation in October. Inequities, FPIs invested Rs 226 crore on a net basis
VK Vijayakumar, chief investment strategist at Geojit Financial Services told PTI
FPIs who were sellers in banking stocks in the first half of September turned buyers in the second half. But they were sellers in software services throughout September. The strong performance by IT companies like Wipro, Infosys, and Mindtree is likely to attract more flows into the segment, going forward.
Statement of Himanshu Srivastava, associate director – manager research, Morningstar India
As markets touched all-time highs and valuations soar, FPI would have preferred to stay on the sidelines, adopt a wait and watch
approach and continue to book profits along the way.
There continues to be a concern among FPIs with respect to the tapering of easy liquidity after the US Fed hinted of a rate hike sooner than expected. Concerns such as rising oil prices and US bond yields and challenges.
The Chinese economy has also been on their radar, thus keeping them on the tenterhook and preventing them from substantially investing in Indian markets.
Statement of Shrikant Chouhan, head-equity research (retail), Kotak Securities
On the future of FPI flows, that Brent crude oil prices are trading at
elevated levels and a sharp increase in energy prices can be a key headwind for the equity markets.
In addition, any increase in the rate by the US Fed Reserve in the near
future would also act as a key headwind for overall flow in the emerging markets. Hence, FPI flows are expected to remain volatile in emerging markets.