Foreign institutional investors (FIIs) are likely to continue their selling streak into October as the investors have started the month on a muted note over high US bond yields. This comes as frontline indices Sensex and Nifty 50 extended losses into the second consecutive session on Wednesday, October 4. However, on a positive note, domestic institutional investors (DIIs) are once again net buyers, injecting ₹1,769.49 crore into Indian stocks on the same day.
According to the National Stock Exchange (NSE) data, FIIs cumulatively bought ₹9,848.55 crore worth of Indian equities but sold ₹14,272.57 crore, resulting in an outflow of ₹4,424.02 crore on Wednesday. In contrast, DIIs infused ₹10,050.08 crore and offloaded ₹8,280.59 crore, registering an inflow of ₹1,769.49 crore. This contrasting behavior of FIIs and DIIs indicates the complex dynamics at play in the Indian stock market.
Analysts point out that FIIs have sold ₹25,000 crore in cash markets over the last month. The primary catalyst behind this sustained selling spree is the surge in US Treasury yields, which recently reached a 16-year high. Additionally, crude oil prices nearly touched $98 per barrel last week, further fueling concerns over high-interest rates and their potential impact on the global economy. These factors have largely supported the FII selling streak that began in August.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented on the situation, stating, “Global cues are negative for markets in the near-term. The sustained rise in US bond yields, which has triggered continuous FII selling, is showing no signs of abating. The dollar index is now clearly above 107, and the US 10-year bond yield is at 4.83 per cent. This means FIIs will continue to sell, and the bulls will be on the back foot.”
As the Indian stock market navigates through these challenging times, investors will closely monitor developments in US bond yields and global economic trends to gauge the future trajectory of FIIs’ investment patterns. The coming weeks will be critical in determining whether the selling streak persists or if there are potential opportunities for a market rebound.
The influence of high US bond yields and global economic uncertainties continues to weigh on the actions of FIIs in the Indian stock market. While DIIs maintain a positive stance, the persistent selling by FIIs poses challenges for market participants, making it essential for investors to remain vigilant and adapt to evolving market conditions.