FII selling trend continues in early November
The Chief Investment Strategist at Geojit Financial Services, V.K. Vijayakumar, has stated that the trend of foreign institutional investor (FII) selling witnessed in September and October has continued into early November as well. In the first three days of November, FIIs sold equity worth Rs 3,063 crore through the cash market.
The selling trend, however, is expected to change in the future as the main trigger for FII selling, the rising bond yields, has reversed. After peaking at 5% on October 19, the 10-year US bond yield has started to decline. In the last two days, the decline has been steep, bringing the yield down sharply to 4.66% on November 3. This reversal in bond yields is attributed to the subtle dovish commentary from US Federal Reserve chief Jerome Powell, who stated that despite elevated inflation, inflationary expectations remain well anchored.
The market has interpreted Powell’s statement as the end of the rate hiking cycle, leading to a sharp correction in yields. As a result, FII selling is expected to be subdued going forward. There is even a possibility that FIIs may turn into buyers to not miss out on the rally in the Indian market.
According to Vijayakumar, frontline banking, automobiles, capital goods, and mid-caps in the IT and real estate sectors are expected to perform well in the coming days.
Summary:
- The trend of FII selling in September and October has continued into early November, with FIIs selling equity worth Rs 3,063 crore through the cash market.
- The main trigger for FII selling, rising bond yields, has reversed as the 10-year US bond yield started to decline, reaching 4.66% on November 3.
- This reversal in bond yields is attributed to the dovish commentary from US Federal Reserve chief Jerome Powell.
- FII selling is expected to be subdued going forward, with a possibility of them turning into buyers to take advantage of the Indian market rally.
- Frontline banking, automobiles, capital goods, and mid-caps in IT and real estate are expected to perform well.
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