An important trend in FPI activity has been identified by V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. The trend shows big selling in the FMCG segment and big buying in telecom and realty. Experts are closely monitoring the impact of US bond yield swings on FPI flows into India.
According to Vijayakumar, the market initially anticipated six rate cuts by the Fed in 2024, leading to a decrease in yields. However, with a more optimistic outlook on the US labour market, the market is now expecting only two rate cuts, causing the US 10-year yield to spike to 4.4 per cent. This shift in expectations may influence FPI flows in the coming months.
Despite the high US bond yields, FPI selling is expected to remain limited as the Indian stock market continues to perform well, setting new records consistently. In March 2024, Domestic institutional investors (DIIs) saw the eighth consecutive month of inflows, reaching $.8 billion, the highest since April 2020. Additionally, FIIs also recorded strong inflows of $4 billion in the same month, indicating positive sentiment towards the Indian market.
Overall, the FPI activity in different segments and the impact of US bond yield fluctuations on India’s market remain key areas of focus for investors and analysts in the current financial landscape.
