Global Funds Return to Indian Stocks, Signaling Continued Market Strength
Global investors are once again buying Indian stocks, indicating that the recent rally in India’s best-performing equity market is likely to continue. After largely being sellers since Indian benchmarks reached record highs in September, foreigners are now buying as they see a domestically-driven economy as better positioned to withstand the global trade war than many other emerging markets.
Last Friday, overseas funds bought $589 million of Indian shares on a net basis, marking an eighth straight day of purchases. This buying streak means they have now invested about $680 million in April, compared to $3 billion sold at one point in the month.
Sneha Tulsyan, an investment analyst at Tokio Marine Asset Management International Pte. in Singapore, said, "Foreigners are coming back as India is perceived to be relatively better placed than other emerging markets due to its faster economic growth despite the trade war. Expectations of further monetary easing and moderating crude oil prices will continue to drive a positive narrative for India."
Global money was a missing piece in India’s recent rebound, which was aided by purchases from local investors, an interest-rate cut, and central bank cash injections that wiped out a monthslong cash deficit in the financial system. Money managers at Franklin Templeton and Federated Hermes have in recent days touted India as a bright spot amid global tariff uncertainties, while UBS Group AG has abandoned its long-held bearish view on the market.
The benchmark NSE Nifty 50 Index has risen over 3% in April, almost double the gain in the broader MSCI Asia Pacific Index. However, the challenge for Indian stocks comes from relatively expensive valuations and rising tensions with neighboring Pakistan after last week’s militant attacks in the northern region of Kashmir that killed 26 people. Some analysts have also warned of the risk of earnings downgrades for the market.
For now, investors are looking past those concerns, with the benchmark jumping the most since April 17 on Monday. Foreigners will continue to chase India as it offers fantastic opportunities to capture strong demographics, economy, and upcoming global supply chains, said Sumeet Rohra, a fund manager at Smartsun Capital Pte. Any dip due to the border tension will be an opportunity to add.
Reference : https://economictimes.indiatimes.com/markets/stocks/news/d-streets-489-billion-rally-is-winning-back-global-funds/articleshow/120716030.cms
