Foreign portfolio investors (FPIs) pumped in $6.4 billion in August, the highest in the last 20 months, as investors bet that a weak US economy would slow the pace of monetary tightening by the US Federal Reserve
A weaker dollar and possible reallocation of flows from China also helped India’s cause. Overseas investors have pulled out $76 billion from China till July this year, the most among emerging markets, as the country’s growth slowed sharply in the second quarter amid widespread lockdowns due to Covid
“Clearly, India seems to be enjoying the TINA (there is no alternative) factor as globally, all countries are facing the churn and India seems to be the best placed jurisdiction in terms of growth and inflation outlook in FY23,” a note by State Bank of India’s research wing said
China’s weight within the MSCI EM has come off from 43.2% in October 2020 to 31.1% now, even as India’s weight has risen from 8.1% to 14.3%.
FPI sentiment had turned in July, after nine consecutive months of outflows, with flows of $0.6 billion. The US GDP contracted for a second successive quarter in Q2 and entered a technical recession in the process, leading market pundits to bet on a pause in rate hikes by October. The reading was that a recession would bring down commodity prices and inflation, obviating the need to jack up rates further.
Whenever interest rates go up in the US, the emerging markets look like a riskier bet, leading to outflows. The reverse is true as well.
The market has adjusted its rate expectations post the hawkish comments of the US Fed chair; it now expects US Fed Fund rate to climb to 4% by early 2023 and stay there in H1CY23. Energy prices still remain a big unknown for the Indian market and high valuations are not comforting, said experts.
At a cumulative investment of $191 billion, the total market value of FPI holdings in India stood at $578 billion as of June 2022, according to domestic brokerage Motilal Oswal Financial Services. Nifty 50 stocks formed 70% of the total FPI holdings in India while Nifty 500 accounts for a 98% share. Over FY12-22, market value of FPI holdings has clocked a CAGR of 11.5% in dollar terms and 16.5% in rupee terms
@Black Tornado @Indos @MH.Yang @Beast @VkdIndian @vishwambhar @Bilal9 @beijingwalker @LakeHawk180 @Skull and Bones
A weaker dollar and possible reallocation of flows from China also helped India’s cause. Overseas investors have pulled out $76 billion from China till July this year, the most among emerging markets, as the country’s growth slowed sharply in the second quarter amid widespread lockdowns due to Covid
“Clearly, India seems to be enjoying the TINA (there is no alternative) factor as globally, all countries are facing the churn and India seems to be the best placed jurisdiction in terms of growth and inflation outlook in FY23,” a note by State Bank of India’s research wing said
China’s weight within the MSCI EM has come off from 43.2% in October 2020 to 31.1% now, even as India’s weight has risen from 8.1% to 14.3%.
FPI sentiment had turned in July, after nine consecutive months of outflows, with flows of $0.6 billion. The US GDP contracted for a second successive quarter in Q2 and entered a technical recession in the process, leading market pundits to bet on a pause in rate hikes by October. The reading was that a recession would bring down commodity prices and inflation, obviating the need to jack up rates further.
Whenever interest rates go up in the US, the emerging markets look like a riskier bet, leading to outflows. The reverse is true as well.
The market has adjusted its rate expectations post the hawkish comments of the US Fed chair; it now expects US Fed Fund rate to climb to 4% by early 2023 and stay there in H1CY23. Energy prices still remain a big unknown for the Indian market and high valuations are not comforting, said experts.
At a cumulative investment of $191 billion, the total market value of FPI holdings in India stood at $578 billion as of June 2022, according to domestic brokerage Motilal Oswal Financial Services. Nifty 50 stocks formed 70% of the total FPI holdings in India while Nifty 500 accounts for a 98% share. Over FY12-22, market value of FPI holdings has clocked a CAGR of 11.5% in dollar terms and 16.5% in rupee terms
@Black Tornado @Indos @MH.Yang @Beast @VkdIndian @vishwambhar @Bilal9 @beijingwalker @LakeHawk180 @Skull and Bones
