Foreign portfolio investors (REITs) have turned net sellers in the capital markets in October so far, reversing the trend of net investment in the previous two months, due to the depreciation of the rupee and global factors, experts said. According to data from custodians, REITs have so far withdrawn Rs.1472 crore from the capital markets on a net basis during the current month.
A trend reversal was seen in the debt segment in October compared to the big buys of the previous two months, when REITs invested Rs 13,363 crore in September and Rs 14,376.2 crore in August. So far in October, they have withdrawn Rs 1,698 crore. “This reversal in debt investing is due to the INR depreciation in October,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
In stocks, REITs have invested Rs 226 crore on a net basis. “REITs that were sellers of bank stocks in the first half of September became buyers in the second half. But they’ve been selling software services throughout September. The strong performance of IT companies such as Wipro, Infosys and Mindtree should attract more streams to the segment in the future, ”he added.
Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said that as markets hit all-time highs and valuations soared, REIT would have preferred to sit on the sidelines, take a wait-and-see approach and continue to record highs. profits along the way. “REITs continue to worry about dwindling easy liquidity after the US Fed hinted at an earlier-than-expected rate hike. Concerns such as rising oil prices and US bond yields and the challenges of the Chinese economy have also been on their radar, thus holding them in suspense and preventing them from investing substantially in Indian markets ”, a- he added.
On the future of REIT flows, Shrikant Chouhan, head of equity research (retail), Kotak Securities said that Brent crude oil prices are trading at high levels and a sharp increase in the price of the energy can be a major obstacle for the stock markets. In addition, any rate hike by the US Federal Reserve in the near future would also be a major obstacle to aggregate flows in emerging markets. Therefore, REIT flows are expected to remain volatile in emerging markets.