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Indian stock market's $489-bn equity rally is winning back global funds
Bloomberg
Global funds' return to Indian equities suggests the likely extension of the recent rally in Asia's top-performing stock market.
Overseas investors turned net buyers in mid-April, drawn to the nation as a relative haven from tariff uncertainty. They bought shares for seven straight session through April 24, with inflows reaching $91 million this month, according to data compiled by Bloomberg. On Friday alone, they plowed $345 million into local shares, provisional data show.
The foreign inflows fill in what had been a missing piece in the rally that's propelled the Nifty 50 Index over 3 per cent this month, outperforming the MSCI Asia Pacific Index. A rate cut by the central bank and cash injections, which wiped out a monthslong cash deficit, have bolstered investor sentiment.
'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,' said Sneha Tulsyan, an investment analyst at Tokio Marine Asset Management International Pte. in Singapore. Expectations of further monetary easing and moderating crude oil prices will continue to drive a 'positive narrative' for India, she said.
April's purchases put local equities on track for their second monthly foreign inflow since September, when a $26 billion exodus began that lasted until the end of February. The rebound from this month's low has added $489 billion to India's market value.
While expensive valuations have left India's equity market short of ideas for some fund managers, the nation's domestically-driven market and low reliance on exports have lured investors seeking a refuge from the trade war. Many funds are increasing their India exposure, and even previously bearish brokers, like UBS Group AG, are becoming less wary.
A key risk for India remains rising tensions with Pakistan after a deadly terror attack in Kashmir last week. For now, investors are looking past it, with the benchmark jumping the most since April 17 on Monday.
'Foreigners will continue to chase India as it offers fantastic opportunity 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.'
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