New Delhi: Heavy selling by foreign portfolio investors (FPIs) in the equity markets is impacting domestic funds and retail investors. In April, FPIs sold equities worth Rs 6304 crore. During this period, equity sales in the cash market stood at Rs 20525 crore. There is a fresh selling trend in the debt market also. VK Vijayakumar, chief investment strategist, Geojit Financial Services, says loan sales in April stood at Rs 10640 crore. The trigger for this fresh FPI selling in both equity and debt is the sustained rise in US bond yields. He said the 10-year bond yield is now around 4.7 percent which is very attractive for foreign investors.
The latest core CPI inflation in the US rose to 3.7 percent versus expectations of 3.4 percent. This means that the chances of the Fed cutting rates soon are decreasing. This will keep yields higher, leading to more FPI outflows in both equity and debt, he said. “The positive factor is that all FPI sales in the equity markets are being absorbed by DIIs, HNIs and retail investors. This is the only factor that can dominate FPI selling.
