Usually, when the yield on 10-year US bonds exceeds 4.15 percent, FPIs sell heavily from the domestic equity markets, but this time it does not seem to be so. Foreign portfolio investors sell heavily when the yield on US bonds exceeds 4.15 percent. As of February 23, FPI selling has come down to Rs 424 crore.

Despite the rise in bond yields in the US, there has been a decline in selling by foreign portfolio investors (FPIs) from domestic equity markets. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, says that usually when the yield on 10-year US bonds exceeds 4.15 percent, FPIs sell heavily from the domestic equity markets, but this time it does not seem to be so.

Currently the yield on American bonds is around 4.34 percent. VK Vijayakumar says that ever since domestic institutional investors (DIIs), high net worth investors (HNIs) and retail investors have increased purchasing, the domestic stock markets are making new records.

As of February 23, FPI selling has come down to Rs 424 crore, which is much less than January’s net selling of Rs 25,744 crore. According to Vijayakumar, market elasticity is preventing FPIs from selling aggressively despite attractive bond yields in the US.

However, FPIs have continued to invest aggressively in the domestic debt markets and have invested Rs 18,589 crore so far in February. In January this year, FPIs had made a net investment of Rs 19,837 crore in the debt markets.

During the calendar year 2024, FPIs have so far invested Rs 38,426 crore in the debt markets, while a total of Rs 26,168 crore has been withdrawn from the equity markets. Due to strong DII buying, the markets are not seeing any impact of the selling done by FPIs during the last two months.