Business
FPIs remain saddled-up, despite negative cues (Weekly Review)
New Delhi, March 14
Foreign Portfolio
Investors (FPIs) continued to stay put in the Indian equities market for
the week ended March 13, despite a slew of negative global and local
cues.
For the week ended March 13, the FPIs bought stocks worth
Rs.3,234.7 crore or $518.24 million, according to the data with the
National Securities Depository Limited (NSDL).
However, the foreign investors sold stocks worth Rs.957.61 crore or $152.69 million in the week under review.
During
the previous week ended March 5, the FPIs had bought stocks worth
Rs.6,861.65 crore or $1.10 billion, on the back of post-budget
expectations and an unexpected lending rates cut by the apex bank.
The
foreign institutional investors (FIIs) along with sub-accounts and
qualified foreign investors have been clubbed together by market
regulator Securities and Exchange Board of India (SEBI) to create a new
investor category called FPIs.
"The FPIs were anxious about the
pace of reform process and the on-going parliament session. The FPIs
were also cautious about the US non-farm payroll data which has gone up
rapidly," Devendra Nevgi, chief executive, ZyFin Advisors told IANS.
The
U.S. non-farm payrolls rose 295,000 jobs last month. This data might
lead to an increase in US inflation which can make the US Federal
Reserve to raise interest rates sooner than previously expected.
With higher interest rates the FPIs are expected to be led away from the emerging markets such as India.
Despite
the sharp increase in the U.S. non-farm payroll data for January and a
slow rebound in oil prices, the FPIs stayed invested in the Indian
markets.
This said the analysts showed that the Indian markets are better placed than their BRICS and Asian counterparts.
However,
the U.S. non-farm payrolls data led the benchmark 30-scrip Sensitive
Index (Sensex) of the S&P Bombay Stock Exchange (BSE) to plunge
945.65 points or 3.21 percent during the weekly trade session ended
March 13.
The Indian equities markets' sentiment again turned
bearish as the data on retail inflation for February showed a marginal
increase from the previous month. This belied expectations of a rate cut
next month.
The Reserve Bank of India is scheduled to announce its first bi-monthly policy review for 2015 on April 7.
The
Indian equities markets discounted positive news such as India's
factory output in January which gained momentum. It also overlooked the
parliament's approval to the insurance law amendment bill in the Rajya
Sabha, despite opposition protests.
Major trigger in the coming
week will be the US Fed meet on March 17 and 18. This meeting will
provide the trajectory of the US economy, which will also reveal as to
when the rate hike might take place.
"Investors across the world
are concerned about the rate hike as it will bring an important change
to the cost of liquidity. Hence until this transformation is initiated,
volatility cannot be avoided across global equities and currencies,"
said Vinod Nair, head, fundamental research, Geojit BNP Paribas.
Other major triggers for the FPIs will be the on going budget session and the wholesale price index (WPI) data.
"The
focus is largely on the ongoing budget session to deliver post budget
measures. We are seeing consolidation with sectoral shifts towards
defensives like pharma and FMCG. This trend is likely to stay for some
time, as investors look at global concerns like US rate hike and
Grexit," Nair said.
Analysts added that the FPIs will also focus
on the government's ability to pass the land and coal bills in Rajya
Sabha in the coming days.
"The FPIs in the coming week will
keenly follow parliament's proceedings especially the government's
ability to pass more bills," added Nevgi.