ARSHAD KHAN @ New Delhi
Foreign investors flock to safer assets like gold, bond
Foreign investors flock to safer assets like gold, bond
Triggered by proposed changes in the India-Mauritius tax treaty, foreign investors offloaded equities worth 8,000 crore on a net basis on Friday. They then sold ₹3,200 crore of equiies on Monday and ₹4,469 crore n Tuesday, as per National stock Exchange (NSE) data The past two-session sell-off is it tributed to growing tension between Israel and Iran, and a sharp rise in US bond yields Not only in India, the foreign investors have seen selling stocks in other emerging markets as well and they see better opportunity and lower risk in Foreign investors flock to safer assets like gold, bond Past two-session sell-off is attributed to growing tension between Israel and Iran, and a sharp rise in US bond yields.
Not only in India, the FPIs selling stocks in other emerging markets as well, as they see better opportunity in safe assets such as government-backed bonds and gold - safe assets such as government backed bonds and gold. US 10- year bond yields surged 14 ba sis points to 4.66% on Tuesday, the highest level in 2024.
‘The recent FPI selling can be attributed to a confluence of factors. The Federal Reserve’s delay in a potential rate cut due to surprisingly high inflation data in the US has made dollar denominated assets more attractive, prompting FPIs to re patriate funds,” said Sonam Srivastava, Founder and Fund Manager at Wright Research. The other factors, according to Srivastava, can be profit booking by the FPIs to secure returns and rebalance their portfolios amidst concerns re garding stretched valuations in ertain sectors of the Indian market. Market exporters also believe that continuous selling by FPIs presents a potential headwind for the Indian market as it can lead to a correction in stock prices, particularly in sectors that have witnessed significant FPI participation.
Srivastava says that if the current corporate earnings season in India delivers strong results, exceeding analyst expectations, it could improve investor sentiment and attract FPI inflows seeking to capitalize on positive developments Secondly, expectations of ro bust economic growth in India compared to other markets could entice FPIs looking foi attractive investment destinations.
“However, there are also potential risks to consider. Con tinued concerns over global in flation and tightening monetary policies by major central banks could dampen investor risk appetite and limit FPI inflows, he added. Domestic stock market is remained closed on Wednesday, April 17, on account of Ram Navami. The equity market will resume on Thursday. Investors are expected to remain cautious on account of tension between Israel and Iran.
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