FPI sold equity worth Rs 25,000 crore in January
New Delhi: An important feature of FPI flows in January this year was the divergent trend in equity and debt flows. While equities saw net sales of Rs 25,734 crore, debt saw net purchases of Rs 19,836 crore. V.K. Say, these data include cash market and primary market and others. Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
There are three reasons for this trend. One, US bond yields rose from about 3.88 per cent in December 2023 to about 4.16 per cent in January. He said this prompted outflows from equities towards high-yield US bonds.
Two, Indian equities became the most expensive in the world (Nifty is trading at a P/E of around 21 based on estimated FY2024 earnings). This triggered equity selling in India.
Third, some FPIs are moving into the Indian bond market expecting inflows following India’s inclusion in the JPMorgan Emerging Markets Bond Fund, he said.
Going forward, FPI inflows into the equity market will depend on the trends in US bond yields and the equity market globally as well as in India. As US bond yields have again fallen sharply, FPIs are unlikely to sell in large quantities in February. They can also become buyers. He said investment in the debt market is likely to continue.
