InvestorQ : How have been the FPI flows during the first half of March 2021?
Dilmini Mercia made post

How have been the FPI flows during the first half of March 2021?

Dawn Cherian answered.
1 year ago

The trend of global investors appeared to be gradually shifting in the second half of February 2021 and that trend appears to be continuing in the month of March also. Foreign portfolio investors or FPIs were overall net sellers to the tune of Rs.7,013 crore in the first half of March 2021. That is the total amount pulled out in the first two weeks of Mar-21.

In the first 2 weeks, investors pulled out a nominal Rs.531 crore from equities but a much higher Rs.6,482 crore from the debt segment. Clearly, the impact of selling in the debt segment was largely triggered by rising US bond yields. After all, when the safe haven yields have doubled, many investors don’t see the reason to be invested in emerging market debt.

In, addition, the equity markets have been tentative about the sharply rising bond yields within India. While the spike has not been anywhere close to what was seen in the US, it is clear that equity valuations would have taken a hit after the spike in the bond yields raised the cost of capital for the Indian investors. That depressed valuation metrics for equities.

It may be recollected that the FPIs had infused Rs.23,663 crore into Indian markets in Feb-21 and Rs.14,649 crore in Jan-21. The moderation of flows into equity was also on account of profit booking at higher levels. Interestingly, during this period emerging markets like South Korea, Thailand and Malaysia have seen marginal inflows into equity and debt.