US Fed Rate Hikes A Headwind For Foreign Flows? | Jibi Jacob | Jefferies

When could foreign investor selling in India finally reverse? Jibi Jacob, Head Of Equity Capital Markets, India, Jefferies, points to three key factors: currency, crude prices and the global interest-rate environment. While uncertainty around these factors is keeping investors cautious on secondary-market positions, foreign investors continue to participate in IPOs, QIPs and block deals. Jacob also highlights the impact of elevated US yields and a potentially higher-for-longer rate environment on foreign participation in InvITs and Indian equities. He notes that the India-US rate differential is among the tightest seen in the past 15-20 years, creating pressure on the currency and potentially equities. A correction in this differential, along with improved macro conditions, could help support foreign flows into Indian markets.