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09-03-2024 05:04 PM | Source: Geojit Financial Services
Two, US bond yields have been steadily declining (the 10-year yield has declined from above 4.3 % to 4.08% now) and this has halted the switch from equity to bonds. The FPI strategy of selling equity in emerging markets to buy US bonds has stopped.
Three, the Indian economy is growing at better-than-expected rates (FY24 GDP growth is likely to be around 7.6%, far ahead of other large economies) and this will have a positive impact on corporate earnings and consequently on the stock market.
These positive developments and the sustained flow of funds into the market - both directly and through institutions- can keep the market resilient. However, high valuations are a matter of concern. Valuations in the mid and small cap segments are excessive and unjustifiable. Correction in this segment is only a matter of time."
Quote on FPI By Dr. V K Vijayakumar, Geojit Financial Services
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Below the quote on FPI from Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"FPIs are turning steady buyers in India as evidenced by the net buying of equity worth Rs 11823 crores this month up to 8th March. FPIs were big sellers in January and very modest buyers in February. There are mainly three reasons for this renewed interest in India.
One, the Indian market is showing great resilience and every dip is getting bought. FPIs have been forced to buy the same shares which they sold at higher prices, which is a losing game.Two, US bond yields have been steadily declining (the 10-year yield has declined from above 4.3 % to 4.08% now) and this has halted the switch from equity to bonds. The FPI strategy of selling equity in emerging markets to buy US bonds has stopped.
Three, the Indian economy is growing at better-than-expected rates (FY24 GDP growth is likely to be around 7.6%, far ahead of other large economies) and this will have a positive impact on corporate earnings and consequently on the stock market.
These positive developments and the sustained flow of funds into the market - both directly and through institutions- can keep the market resilient. However, high valuations are a matter of concern. Valuations in the mid and small cap segments are excessive and unjustifiable. Correction in this segment is only a matter of time."
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