MUMBAI – Foreign portfolio investors (FPIs) have been withdrawing substantial funds from Indian equities, influenced by concerns about high valuations and a rise in US bond yields. The sell-off in stocks has been particularly pronounced after HDFC Bank reported earnings that fell short of expectations. Despite the equity market pressures, there has been a contrasting trend in the Indian debt market where FPIs have demonstrated a growing interest.
The amount pulled from Indian equities by FPIs ranges between Rs 13,000 crore and Rs 16,455 crore ($1 = ₹83.12). This outflow coincides with a period when US bond yields have been climbing, which typically diminishes the attractiveness of stocks, especially in emerging markets like India. The increase in yields from 3.9% to 4.15% has, conversely, made Indian debt more appealing to FPIs, resulting in an investment of Rs 15,647 crore in this asset class.
The information technology (IT) sector has seen a boost in FPI investments following positive reports post the third quarter, suggesting a selective approach by foreign investors.
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