Foreign investors i.e. FPIs have so far adopted a very cautious approach and have withdrawn more than Rs 13,000 crore from the Indian stock markets in the first three weeks of January. FPIs remain sellers due to high valuations of Indian shares and rising US bond yields. Contrary to this trend, foreign investors are enthusiastic about the debt market i.e. bond market. So far in January, foreign investors have invested Rs 15,647 crore in the bond market.
According to depository data, foreign investors have withdrawn Rs 13,047 crore from Indian shares this month till January 19. That means they have sold shares worth Rs 13,047 crore so far in January. He sold shares worth more than Rs 24,000 crore during January 17-19. Earlier in December, FPI had put in a net amount of Rs 66,134 crore in shares and in November, Rs 9,000 crore.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, said, “There are two reasons for the selling by FPIs. Bond yields are rising in America. The yield on 10-year bonds has increased from the recent level of 3.9 percent to 4.15 percent, leading to capital outflow from emerging markets. He said that the second reason is the high valuation of stocks in India. FPIs are selling on a large scale citing weaker than expected results of HDFC Bank.
Himanshu Srivastava, Associate Director-Manager Research, Morningstar Investment Research India, said that the reason for the massive selling by FPIs is the disappointing quarterly results of HDFC Bank. He said that FPIs adopted a cautious approach in the beginning of the new year and booked profits in the Indian stock markets due to high valuations. Srivastava said, ‘Apart from this, uncertainty regarding the interest rate scenario has also forced them to remain on the sidelines. They are waiting for more indicators before investing in emerging markets like India.