FPIs adopt caution amidst election buzz

FPIs adopt caution: Foreign Portfolio Investors (FPIs) have taken on a cautious stance amid the ongoing general elections, reflecting a "wait and watch" approach. Data reveals that in the initial two trading sessions of May, FPIs infused a mere Rs 1,156 crore into the market.

This conservative approach follows FPIs offloading equities worth Rs 8,700 crore in April, prompted by concerns surrounding tax treaty adjustments with Mauritius and a persistent uptick in US bond yields. In contrast, FPIs had made substantial net investments of Rs 35,098 crore in March and Rs 1,539 crore in February.

The recent trading data from depositories indicates that in the first two days of May, FPIs directed Rs 1,156 crore into equities while divesting Rs 1,726 crore from debt instruments.

Himanshu Srivastava, Associate Director of Manager Research at Morningstar Investment Research India, noted that foreign investors are exercising caution while awaiting the outcome of the general elections in India.

Furthermore, Srivastava highlighted that, despite a mixed bag of US economic data indicating a somewhat robust economy, there are indications of a potential delay in the Federal Reserve's first interest rate cut. He pointed out that recent US job figures suggest a slowing economy, possibly necessitating rate cuts, especially as wage increases remain below 4 percent, signalling a weakening labour market.

(with PTI inputs)