FPI outflows to continue amid high US bond yields, better returns from IPOs

NEW DELHI: Given the high US bond yields and better returns from India’s IPO market, the trend of FPI outflows is likely to continue, according to analysts.

Yet another significant trend in FPI investment is that even though they are sellers in large-caps, they have been sustained buyers in mid-and small-caps.

FPIs also are chasing the market momentum, said analysts.

This month, the total equity outflows through exchanges reached Rs 25,682 crore through August 25.

The trend of FPI investment through the primary market continues with total investment of Rs 8,551 crore (up to September 25), said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

This trend of selling through the exchanges and investing through the primary market has taken the total FPI selling this year through exchanges to Rs 295,971 crore and the total investment through the primary market during this period to Rs 54,398 crore.

The Indian stock markets ended lower for the seventh consecutive week amid weak domestic and global cues.

The Sensex declined 0.54 per cent to close at 73,895.74, while the Nifty fell 0.88 per cent to settle at 23,140.50.

Broader markets also remained under pressure, with both midcap and smallcap indices witnessing weakness. Sectoral performance remained mixed, with technology and financials among the key laggards. In contrast, Realty emerged as the strongest-performing segment.

Crude oil prices and geopolitical developments remained the key drivers of market sentiment during the week, said analysts.

The divergence between improving domestic growth indicators and weakening market breadth suggests that external factors remain the dominant near-term influence. Volatility is likely to remain elevated until greater clarity emerges on crude oil prices and geopolitical developments, they added.

The improving domestic growth outlook remains a positive factor, but external risks warrant a measured approach towards fresh positions.