The foreign investors have pulled ₹881 crores from equities and ₹4,275 crores from the debt segment from March 1 to March 5, driving the total net withdrawals to ₹5,156 crores according to the statistics available with the depositories. Earlier, the FPIs had invested ₹23,663 crores in February and ₹14,649 crores in January.

 

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Himanshu Srivastava, associate director - manager research, Morningstar India thinks that the foreign portfolio investment (FPI) outflows in March could be attributed to profit-booking by investors with markets touching all-time highs. According to VK Vijayakumar, chief investment strategist at Geojit Financial, the weakness in the global markets on concerns of rising bond yields and inflation didn't forecast well for the flows into equities. So far, the declining trend in March is mainly due to the account of the rising bond yields in the US and appreciation in the dollar index. In the US due to the massive monetary and fiscal stimulus, the bond markets are discounting reflation. The US 10-year yield is unlikely to go beyond, given the declared policy keeping the interest rates near zero throughout 2023. According to him, the upcoming FOMC Meet is likely to emphasize the need to keep rates down for an extended period, and this can cool the bond markets and stabilize equity markets.

According to Srivastava, Going ahead the focus will be on economic numbers and how soon India gains the economic momentum back. However, with the markets continuing to surge with high valuations, the possibility of profit booking remains, which can reduce the pace of net flows.

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