Reuters data shows that in the March-July period, FPIs bought domestic shares worth Rs 1,553.08 billion, triggering a 14.15% rise in Nifty 50 index. In contrast, the blue-chip fell 1.62% in the first half of August. Moreover, FPIs turned net sellers in financial services in the first half of August, offloading Rs 28.21 billion, after buying shares worth Rs 555.79 billion over the last four months.
US 10-year bond yields have been oscillating around the 4% mark (3.4-4.3%) over the past one year as the US Fed approaches the end of its jumbo rate hike cycle driven by a moderating inflation outlook.
“The most recent surge in US yields from 3.75% to 4.3% was triggered by the rating downgrade by Fitch and is putting pressure on FPI flows towards India. However, the US 10-year bond yield is likely near its upper range given the outlook for inflation. This should alleviate concerns around FPI outflows even as structural domestic equity flows in India continue to be positive as evidenced by record-high SIP flows. Growth outlook for India relative to China continues to be robust driven by a strong investment and real estate cycle supported by low NPAs in the system,” said Vinod Karki of ICICI Securities.
Overall FPI inflows since April 23 have been strong at $19 billion
FPI flows trends across EMs and DMs – India flows relatively better
Source: Bloomberg, I-Sec research
Note: China data is available till Jun’23 while for Aug’23 data is till date for other countries.
FPI holding of NIFTY50 index nudged up 140bps during Q1FY24.
For JulY 23, FPI portfolios bought across sectors and continue to load up risk (beta and value stocks) while MFs saw mixed trends: Data on aggregate sectoral institutional flows during Jul’23 indicates FPIs continued buying risk (high beta and value) in the form of stocks largely related to cyclical and capital-intensive sectors (financials, industrials, discretionary consumption, energy). However, active MF funds saw mixed trends with buying in financial services, IT, healthcare, metals and staples – while selling was observed in energy, industrials, private banks, auto and telecom.
FPI adds active risk
FPI Sectoral fows since April 2023