Quote on FPI by Vipul Bhowar, Director Listed Investments, Waterfield Advisors
Below the Quote on FPI by Vipul Bhowar, Director Listed Investments, Waterfield Advisors
"The unwinding of the Yen carry trade on August 24 significantly impacted FPI behaviour, leading to substantial selloffs in Indian equities. This unwinding coincided with rising fears of a potential recession in the U.S. and disappointing economic data, which further exacerbated the market's reaction.
FPIs have been selling in the secondary market, where valuations are perceived to be high, and redirecting their investments towards the primary market, which offers relatively lower valuations. This shift in investment strategy, coupled with lacklustre earnings reports from critical sectors, may have further discouraged FPIs from maintaining their positions in Indian equities.
The recent announcement of increased capital gains tax on equity investments has also prompted foreign portfolio investors to sell off their holdings, shifting funds towards safer debt instruments.
The inclusion in global bond indices, attractive interest rates, stable economic growth, shift from equities, and favourable long-term outlook have been the key factors driving FPIs to invest in debt.
While September is likely to see continued interest from FPIs, the flows would be shaped by a combination of domestic political stability, economic indicators, global interest rate movements, market valuations, sectoral preferences, and the attractiveness of the debt market."
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