Money managers and analysts said flows in November will depend on whether the risk-off sentiment persists though historically equities here have mostly seen foreign purchases during the month in the past decade.
In the past 10 years, overseas investors have purchased stocks here on seven occasions in November, while sold thrice.
The US Treasury yields stood at 4.84% on Tuesday, after crossing 5% on October 23 for the first time since 2007.Analysts said that whenever US treasury yields rise, Foreign Portfolio Investors (FPIs) tend to sell out from riskier asset classes such as emerging markets.
“Investors are cautious on Emerging Markets due to the negative sentiment which has impacted the US as well, with investors turning towards cash and bonds,” said Dan Kemp, global chief investment officer, Morningstar Investment.
Apart from the rising US yields, analysts said any escalation of the Israel-Hamas conflict could fuel further caution among investors.
“If the conflict leads to disruption in trade routes and supply chains, then inflation is likely to go up which means rates will be higher for longer,” Amar Ambani, head of institutional equities, YES Securities.Analysts said that foreign investors are selling across emerging markets, not just in India. In such times, safe-haven assets and stronger currencies are preferred by foreign investors as currencies of emerging markets come under pressure. “Emerging Markets are out of favour with foreign investors, but the trend is cyclical in nature,” Kemp said.
Download The Economic Times News App to get Daily Market Updates & Live Business News.
Top Trending Stocks: Sensex Today Live, SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price