Higher US Treasury yields and the rupee slipping to record lows have led to some position unwinding by foreign investors, who have sold nearly $1.3 billion of government bonds in April.
Sustained buying by overseas funds in Indian government bonds faces a sudden trend reversal due to firm American economic data and rising US bond yields. The surge in US yields and oil prices adds uncertainty to India s inflation and trade deficit outlook.
Sensex and Nifty plummeted as FPIs sold off, influenced by US inflation and tweak in India-Mauritius tax treaty. Investors are also cautious on valuations, profit booking, and rising commodities prices. EPS growth is likely to moderate in Q4 earnings season which begins today with TCS.
In February through 16th, FPIs had sold equity worth Rs 6,112 crore through the exchange but buying through the primary market and others reduced the net selling figure to Rs 3,776 crore.
Though traders blamed this correction to selling by foreign institutional investors (FIIs) amid Sebi s additional disclosure norms, but HDFC Bank in a statement said that there was no evidence to support FPI outflows with Sebi s new circular