• By Goodwill
  • 122 Comments
  • September 23, 2023

MARKET OVERVIEW :

FIIs offload ₹1,327 crore in Indian equities on high US bond yields, DIIs invest ₹801 crore; what lies ahead?

INDIAN BOURSES ON CORRECTION MODE! AVAIL THE CHANCE.

FIIs have sold ₹7,300 crore in the last three trading sessions and around ₹16,934 crore in Indian equities till September 21, according to analysts. FIIs sold ₹1,327 crore in Indian equities today. Photo: Reuters. Foreign institutional investors (FIIs) continued their selling streak as Sensex and Nifty extended losses for the fourth straight session on Friday, September 22. The domestic institutional investors (DIIs) turned net buyers and invested ₹80 crore in Indian stocks today. As per the NSE data, FIIs cumulatively bought ₹10,840.20 crore of Indian equities, while they sold ₹12,166.94 crore — resulting in an outflow of ₹12,166.94 crore on Friday. Meanwhile, DIIs infused ₹7,902.06 crore and offloaded ₹7,100.79 crore, registering an inflow of ₹801.27 crore. FIIs have sold ₹7,300 crore in the last three trading sessions and around ₹16,934 crore in Indian equities till September 21, according to analysts. US Treasury yields rose to their multi-year high levels and a stronger US dollar has widely triggered FII selling. ‘’The FIIs have reversed their ‘Buy India strategy’ which they have been following in the last 3 months with selling to the tune of ₹16,934 crore in September through 21st,” The  US Federal Reserve, in its latest policy decision, held its overnight benchmark interest rate to 5.25 per cent – 5.50 per cent, however, it signalled that another rate hike is possible before the end of the year. “The Fed’s hawkish pause message has created a global risk-averse sentiment in global equity markets. The spike in the dollar index to 105.52 and the US 10-year bond yield shooting up to a 16-year high of 4.5 per cent are negative for equity markets, particularly emerging markets,” ‘’Countering this negative trend is the hugely positive news of JP Morgan including India in the Emerging Market Bond Index with a weightage of 10 per cent from June 2024 onwards. This will reduce bond yields and the consequent decline in the cost of borrowing will boost the bottom line of companies,”. Domestic benchmark indices Sensex and Nifty settled lower for the fourth consecutive session on Friday amid weak global cues as the crude oil prices rose by about a per cent, weighing on investors’ sentiment for riskier equities. Foreign fund outflows and heavy selling in HDFC shares also hit investor sentiments, according to traders. Nifty 50 closed with a loss of 68 points, or 0.34 per cent, at 19,674.25 while the Sensex ended at 66,009.15, down 221 points, or 0.33 per cent. Mid and small caps outperformed the benchmarks as the BSE Midcap index ended lower by 0.14 per cent while the BSE Smallcap index ended with a nominal gain of 0.04 per cent.

How will FII selling benefit markets?

Market analysts expect FII’s to continue selling in Indian markets as long as US bond yields are on an uptrend. Profit-booking in markets can continue over FII activity. Meanwhile, DIIs buying interest offsets the risk to a certain extent. ‘’In the near-term, FIIs may press further selling in response to rising US bond yields. If this happens it will open up opportunities for investors to buy quality large-caps, particularly banking stocks which will benefit a lot from the bond inclusion,” Feeble global cues combined with pressure on select heavyweights are weighing on the market sentiment. Going ahead, recovery in the banking and financial majors would be critical for any meaningful rebound else the corrective tone would continue, according to analysts.
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