India Again Finding Favour with FIIs: Edelweiss
Mumbai: Foreign institutional investors’ interest in India is picking up again following a spell of selling in the wake of demonetisation and a weakness in emerging markets in recent months. That is one of the key takeaways from Edelweiss’ two-day annual investment conference that concluded on Thursday.
“Foreign investors are sitting on a lot of cash. They want to deploy cash because post November 8, there has been a lot of selling. From overweight, India has come to equal-weight in most portfolios and that has created cash,” said Vikas Khemani, president, Edelweiss Securities.
Foreign investors are sitting on a lot of cash. They want to deploy it because post November 8, there has been a lot of selling
Foreign Portfolio Investors (FPIs) net sold shares worth about Rs 31,200 crore in the three months ended December, primarily due to strength in the dollar-based assets after Donald Trump, who advocates anti-globalisation, was elected as US President. The Indian government’s move to pull out 86% of the currency in circulation on November 8 by banning higher denomination notes added to the FPI’s woes.
However, the pace of selling slowed in January when FPIs sold shares worth about ₹ 46 crore. With no negative surprises in the Union Budget, FPIs have turned buyers again, picking up shares worth nearly ₹ 1,400 crore in February so far.
According to Khemani, India as an investment destination is finding lot of favour with FPIs. “EM funds are also beginning to get flows. In the EM basket, India is a bright spot,” Khemani said on the sidelines of the conference.
The recent turnaround in sentiment in the Indian equity market is being attributed by market experts to corporate earnings for the December quarter which started off in January and have indicated that the impact of demonetisation is not as bad as feared. Companies are now optimistic about the road ahead and are back in the growth mode, Khemani said. “From growth perspective, most companies have given a positive and robust outlook. They see demonetisation as a blip and say they are back to normal. We estimate around 14-15% growth for FY18. We will probably start seeing ear nings upgrade cycles soon,” he said.
President, Edelweiss Securities