Due to US bond yields and the Israel-Palestine conflict, FPIs have pulled out over Rs 12,000 Crore from Indian equities and invested over Rs 5,700 crore in Indian debt. Global inflation, interest rate fluctuations, and geopolitical concerns will affect FPI investments in India…

Foreign portfolio investors (FPIs) have pulled out about Rs 12,000 crore from Indian equities due to rising US bond yields and the Israel-Palestine conflict. Depositories show FPIs invested about Rs 5,700 crore in the Indian debt market during this time.

Himanshu Srivastava, Associate Director – Manager Research at Morningstar Investment Adviser India, predicts that global inflation, interest rate dynamics, and the Israel-Hamas conflict will affect FPI investments in India. Geopolitical tensions can increase risk and reduce foreign funding into emerging countries like India.

International markets are unstable due to global uncertainties, particularly geopolitical issues in Israel and Ukraine, which have caused the current outflow. The continued selling is partly attributed to US bond yields rising to a 17-year high of 5% on October 19.

Global events may increase demand for safe-haven assets like gold and the US currency. The Rs 5,700 crore debt market influx is attributed to FPIs diversifying their investments due to global uncertainties, attractive Indian bond returns, and rupee stability assumptions. India’s inclusion in the JP Morgan Global Bond Index also helps.

This shows how FPIs adapt their investment strategy as they switch asset classes. FPI investment in equities surpassed Rs 1.08 lakh crore this year, with close to Rs 35,000 crore in debt. FPIs have sold in many sectors, with muted purchases in the auto and capital goods sectors and purchasers in telecom.

Conclusion

Due to rising US bond yields and the Israel-Palestine conflict, FPIs have pulled out about Rs 12,000 crore from Indian equities. Depositories show FPIs invested about Rs 5,700 crore in the Indian debt market during this time. Global inflation, interest rate dynamics, and Israel-Hamas conflict intensity will affect FPI investments in India. Geopolitical tensions can increase risk and reduce foreign funding into emerging countries like India. International markets are unstable due to global uncertainties, particularly geopolitical issues in Israel and Ukraine, which have caused the current outflow. On October 19, US bond yields reached a 17-year high of 5%, which contributed to continued selling. Diversifying investments due to global uncertainties, attractive Indian bond returns, and rupee stability explain the Rs 5,700 crore debt market influx.

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