BOND YIELDS, MACRO DATA TO SET TONE FOR MARKET

NEWDELHI: Remaining net buyers for second consecutive month in this calendar year, overseas investors pumped in Rs 23,663 crore in Indian markets in February on account of positive sentiment due to the Union Budget 2021-22 and strong third quarter earnings.

Foreign portfolio investors (FPI) invested a net Rs 25,787 crore into equities but pulled out Rs 2,124 crore from the bonds market during February 1-26, the depositories data showed.

This took the total net investment to Rs 23,663 crore during the period under review.

Last month, the total net investment stood at Rs 14,649 crore.

Rusmik Oza, executive vice-president and head (fundamental research) at Kotak Securities, said, "Most of the FPI flows this month can be attributed to the strong outcome of the Union Budget and third quarter earnings season." Besides, Geojit Financial Chief Investment Strategist V K Vijayakumar noted that the pace of FPI inflows has slowed since the US 10-year yield is spiking up.

The US 10-year bond yield is a hugely important determinant of capital flows. Inflation expectations are pushing the yields up. This will slow capital inflows, he added.

Oza said the yield, which started the calendar year at 0.91 per cent, has now risen to 1.47 per cent. "It has led to bond yields rising across the globe." Also, USD 1.9-trillion stimulus coming from US government could lead to sharper recovery in the US GDP in this calender year.