“India remains in a sweet spot,” said Amnish Aggarwal, a head of research at Mumbai-based brokerage Prabhudas Lilladher Pvt. Stock markets in India stand out as they offer diversified opportunities along with a fast-growing economy, and this is in contrast to the slowing growth in Europe and the US and many parts of Asia, he added
Mumbai:
Indian equities stood out in August as foreign investors sold stocks in almost every other Asian emerging market, thanks to the nation’s strong corporate earnings performance and its growing appeal as an alternative to China.
Global funds purchased $1.6 billion of Indian shares on a net basis last month through Aug. 30, according to the latest exchange data compiled by Bloomberg.
That’s even as they withdrew a combined more than $6 billion from Taiwan, South Korea and Indonesia. With a small $35 million inflow through Aug. 24, Malaysia was the only other exception.
August also marked a sixth straight month of inflows into Indian stocks. With this year’s inflows, foreigners are now just $137 million shy of reversing their record $17 billion exodus from the nation’s equities in 2022.
While this year’s 6.3% gain in India’s benchmark trails its peers in Taiwan and South Korea, the South Asian nation’s stocks remain among the most consistent performers in the region.
FPIs bought Indian stocks worth Rs 7,936 crore, Rs 11,631 crore, Rs 43,838 crore, Rs 47,148 crore, and Rs 46,618 crore, and Rs 12,262 crore in March, April, May, June, July, and August respectively, data showed. In August, however, the quantum of fund inflow had slowed.
So far in 2023, foreign investors have cumulatively put in Rs 135,287 crore in the Indian stock markets. The latest fund inflows started after the recent banking crisis in the US, leading to the Silicon Valley Bank’s closure, among others, in March. Also, India’s strong economic outlook, as forecasted by various global agencies, seemed to have made for a renewed appetite for domestic stocks.
One of the most prominent lenders in the world of technology startups, Silicon Valley Bank, which had been struggling, collapsed on March 10, after a run on the bank by the depositors. Its closure led to a contagion effect and the subsequent shutting down of other banks. The foreign funds making their way into Indian stocks buoyed the broader market as the indices touched their respective fresh peaks. Sensex crossed the 67,000 mark for the first time.
Notably, in January and February, FPIs sold equities worth Rs 28,852 crore and Rs 5,294 crore, respectively. NSDL data showed. Foreign investors were apparently cautious amid risks from the then-volatile financial markets. Barring some exceptions including the current one, foreign portfolio investors (FPIs) have been selling equities in the Indian markets for over a year, which started in October 2021 for various reasons.
In 2022, foreign portfolio investors sold Rs 121,439 crore worth of stocks in India on a cumulative basis, the data available on the NSDL website showed. Tightening monetary policy in advanced economies including rising demand for dollar-denominated commodities, and strength in the US dollar had then triggered a consistent outflow of funds from Indian markets. Investors typically prefer stable markets in times of high market uncertainty.
The NSE Nifty 50 Index is heading for an eighth annual advance. Stocks of small- and mid-sized firms, which are seen as better placed to benefit from the country’s efforts to capture a bigger share of global supply chains, have outperformed in 2023.
“India remains in a sweet spot,” said Amnish Aggarwal, a head of research at Mumbai-based brokerage Prabhudas Lilladher Pvt. Stock markets in India stand out as they offer diversified opportunities along with a fast-growing economy, and this is in contrast to the slowing growth in Europe and the US and many parts of Asia, he added.