FPIs May Continue to Sell in India Due to Rising Bond Yields in US

The rising bond yields in the US are impacting equity markets, says V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

The rate cut from the Fed expected in July is fading now since the labour market continues to be tight and the rising crude (Brent at $89) is feared to add to inflation further constraining the ability of the Fed to cut. Even though the Fed chief has been sounding dovish recently, the market is now less optimistic about 3 rate cuts in 2024. This will continue to be a drag on equity markets globally. In India, FPIs may continue to sell, he said.

It is possible that the dips will get bought since this has been a successful strategy in India and domestic money has been calling the shots here. Since Nifty is up 3 per cent from the March lows, the market is resilient and the undertone is strong. Valuation comfort is in large caps, he said.

Deepak Jasani, Head of Retail Research, HDFC Securities, said the National Stock Exchange (NSE) said it halved the lot size for trading derivatives contracts for the Nifty 50 index to 25 and reduced the lot sizes for two other indexes as part of its periodic revision. The World Bank on April 2 raised its GDP growth projection for India by 20 basis points to 6.6 per cent in FY25. The global agency's projection for FY25 is significantly moderate compared to the estimate of a real GDP growth of 7.5 per cent in the current financial year. However, it expects growth to pick up in subsequent years as a decade of robust public investment starts yielding dividends.