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Charts & Analysis

US 10 year Hits 3%, FIIs Take Out 73K Cr. in 3 Months

And that’s the highest in over 2 years:

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And in the process, the world’s largest mutual fund takes a $41 billion loss.

Impact: To us, the problem is of dollar outflows. Already, we have over 73,000 cr. exit the Indian capital markets (debt+equity) since June.

Net Monthly FII Investment

Note, this is SEBI Data, and is only updated till Tuesday evening, before the historic Rajan speech. Yesterday, banks went up 10%, and it’s likely FIIs bought to reverse September to a positive number.

Will it get worse on 17th/18th after the FOMC meeting? Will Rajan raise rates on the 20th? Will inflation come in high on the 12th and the 15th? Will IIP show more degradation?

The impact of a rising US 10 year yield will be apparent only when there is more definitive action, both from the US and India. The Indian 10 year yield meanwhile is at 8.4% and the dollar at 66.

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