The Foreign Institutional Investors (FIIs) gave India a new hope about the country’s inflow of foreign funds.
Indicating investor confidence, FIIs funds into India in the last seven days equaled 40 percent of what they sold in March 2020.
The gradual economy re-opening measures by the Federal Reserve has reportedly instilled investor confidence in riskier assets.
Around Rs. 23,000 crore fund (USD 3 billion) has flown into the country in the last seven days. in the form of overseas purchases, compared to sales worth Rs. 58,000 crore in March 2020.
With that figure, India stands ahead of South Korea and Taiwan, which received the only USD 345.3 million and USD 853 million, respectively.
Since April 2020, India has seen higher FII inflows compared to these nations, including Japan.
According to Nilesh Shah, MD of Kotak Mahindra AMC, the polarization of these funds into various companies will continue. In contrast, the funds’ inflow is expected to sustain.
“FII flows revival story in India is a global flow story, and it probably doesn’t have much to do with India specifically. As US equities’ valuations continue to get richer, investors are looking at other avenues,” says Krishna Memani, emerging markets investor and former vice chairman, investments at Invesco.
Meanwhile, global markets are slowly rising from their previous lows in March 2020, majorly due to liquidity support from their respective Central banks and the ease of lockdown.
But the industry is deeply concerned about the demand revival post lockdown and the subsequent underperformance.
“In the near to medium term, investors are putting money back to work in emerging markets thanks to unprecedented liquidity provided by the US Federal Reserve, the European Central Bank, and other central banks,” says another expert in investor portfolio management.