InvestorQ : Is the FPIs pulling out money in the first week of March a concern for markets?
Niti Shenoi made post

Is the FPIs pulling out money in the first week of March a concern for markets?

ishika Banerjee answered.
1 year ago

After a long time the FPI trend has shifted towards net selling in the first week of March 2021. In the first week of March ended 05-Mar, the FPIs pulled out Rs.5,156 crore. One can argue that the amount is too small and also the time period of one week is too short a time frame to judge a trend. However, this selling is material if we look at it in the backdrop of the consistent flows that we saw from the FPIs in the last few months.

This profit booking by FPIs happened in the light of the rising bond yields in the US and a similar trend that was visible in India in the 10-year benchmark yields. Of course, it was only a sum of Rs.881 crore was pulled out of equities and the balance funds o fRs.4,275 crore was actually pulled out of the debt segment. Debt flows have been under pressure for some time due to interest rate differentials narrowing between India and the US.

Apart from the US bond yield risk hinting at possible rate hikes, this profit booking can also be attributed to the market scaling higher levels in terms of market cap / GDP ratio. Bond markets are clearly discounting the possibility of reflation in the US in the aftermath of the massive monetary and fiscal stimulus. However, the focus this week will shift to macro points like CPI and IIP data announcement as well as bank loans and deposits data.