FPI Selloff: Explore the reasons behind the February selloff trend by FPIs in Indian equities and its impact, featuring expert analysis and market dynamics.
also read Tower Semiconductors: Why This Israel Based Company Poised To Invest In India?
Introduction: FPI Selloff
In February, the global financial markets witnessed a significant trend – the massive selloff by Foreign Portfolio Investors (FPIs) in Indian equities. This article delves into the driving forces behind this trend and its implications.
- US Bond Yields Surge: The selloff by FPIs can be largely attributed to the surge in US bond yields. Higher-than-expected consumer price inflation in the United States has led to sustained selling by FPIs in the Indian cash market.
- Expert Analysis: V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, offers insights into the situation. He predicts that as long as US bond yields remain elevated, the trend of FPI selling is likely to persist.
- Balancing Act: Despite the selloff, FPIs have shown restraint due to robust buying action from domestic institutional investors (DIIs). This balance has prevented FPIs from engaging in aggressive selling, anticipating favorable buying conditions in the future.
- Divergent Market Dynamics: While FPIs have been actively selling in the equity market, their buying activity in the debt market has remained steady since the beginning of the year. This indicates a nuanced approach by FPIs in adjusting their investment strategies based on market conditions.
- Market Performance Amidst Selloff: Interestingly, amidst the selloff in equities, Indian benchmark indices have continued their winning streak. Strong buying action in sectors such as auto and IT has bolstered market sentiment.
Who controls FPI in India?
The entities falling under this category comprise regulated asset management companies, investment funds, portfolio managers, banks, pension funds, and other regulated funds. SEBI oversees the regulation of FPIs in India.
How much FPI is allowed in India?
According to Regulation 3(1), under the FII Regulations, investments by each FII/SA must not surpass ten percent of the total issued capital of an Indian company. In contrast, the FPI regulations stipulate an investment limit for each FPI that is below ten percent.
What is difference between FDI and FPI?
Foreign Direct Investment (FDI) occurs when a company or individual invests in business ventures located in a foreign country, while Foreign Portfolio Investment (FPI) involves investing in securities and other financial assets issued by entities in another country.
What is difference between FII and FPI?
FPI and FII vary in their characteristics, extent, and regulatory frameworks. FPI typically entails passive investments by individuals and institutions aiming for diversification, while FII involves more active participation by institutional investors, potentially influencing market dynamics.
Who is eligible for FPI?
Applicants should possess ample experience, a strong track record, professional competence, financial stability, and a reputation for fairness and integrity.
Are FPI registered with SEBI?
These investments fall under the purview of the SEBI 2014 regulations for Foreign Portfolio Investors, which mandate foreign investors to register with SEBI before engaging in Foreign Portfolio Investment activities.
Why are FPI pulling money out of India?
Market experts attribute FPIs halting their buying streak in early January to global cues, particularly the rise in US bond yields from 3.9 percent to 4.24 percent. This increase triggered capital outflows from emerging markets like India. They suggest that as long as US bond yields stay elevated, the trend of FPI selling is expected to persist.
Conclusion: FPI Selloff
The FPI selloff in February reflects a complex interplay of global and domestic factors. While challenges persist, opportunities abound for investors who remain vigilant and adaptable in navigating these dynamic market conditions.
(Disclaimer: The recommendations, suggestions, views, and opinions expressed by the experts are their own and do not necessarily reflect those of News Ki Baat .)
also read FPIs sell equities worth Rs 3,776 crore in February so far
1 thought on “FPI Selloff: Why There Is a Massive Selloff Trend By Foreign Portfolio Investors In February?”
Comments are closed.