Foreign portfolio investors withdrew 8.81 billion net rupees from the Indian stock market in the first week of March
Foreign portfolio investors (REITs) have turned to sell their holdings in India after a two-month buying streak amid rising bond yields in the United States.
REITs withdrew 8.81 billion rupees net from the Indian stock market in the first week of March. They took over a net investment of Rs42.75 billion from the debt segment bringing the total net withdrawals to Rs51.56 billion, showed National Securities Depository Limited (
REITs invested Rs236. 63 billion in February and 146.49 billion rupees in January. The inflow of REITs during the current fiscal year has been robust and 2.62 trillion rupees of net investments were made in fiscal 21 by REITs.
Rising U.S. bond yields almost put an end to the uptrend in both global and domestic stock markets, analysts said.
In addition, investors also opted to reserve profits after markets hit record highs, analysts said.
Investors are hopeful that the next Federal Open Market Committee meeting will focus on keeping interest rates subdued for some time, which could stabilize bond markets.
JP Morgan, a major player in financial services in the United States, has predicted massive sales to the tune of $ 316 billion as investors try to balance their portfolios.
According to a report in Zero Hedge, that number will likely be lower after last week’s sale following JP Morgan’s original analysis, and perhaps some $ 40 billion less based on the sales assumptions. forced into Norway.
“Overall, we see some equity market vulnerability at the end of the quarter from pension fund entities as well as well-balanced mutual funds selling stocks and buying bonds to rebalance towards their target allocations. stocks / bonds, ”JPM said.
This is more of a correction in an uptrend, given rising yields in the United States and the fact that valuations are overexploited, according to UR Bhat, director of the FII board of Dalton Capital Advisors.
Analysts expect more profit bookings in the coming days, especially if US yields rise from current levels of 1.5 percent.
“Volatility would increase from now on, but a collapse is very unlikely,” said Hitesh Jain, senior analyst, institutional stocks, Yes Securities. “I think the 10 years in the United States could go over about 1.7%. The effect on an ME like India would translate to a range of 13,800-16,000 over the next three months. “
JPM analyst Nick Panigirtzoglou said the issue of equity rebalancing flows is resurfacing in conversations with clients as the end of the quarter approaches. “The rally in stocks and liquidation in bonds during the current quarter naturally creates a pending rebalancing flow for multi-asset investors, shifting from stocks to bonds for pension funds and balanced mutual funds,” did he declare.
JPM estimates around $ 107 billion in sales of equities by balanced mutual funds around the world at the end of March in order to get back to their target allocation of 60:40.
The fundamental factors driving the stock market down are fear of higher inflation and the valuation of tech stocks. The reason is that accommodative monetary policy (the Fed is buying assets and keeping interest rates historically low) and stimulus support are contributing to the process of economic recovery.