Why FIIs are betting big on Indian markets
The Indian stock market has been a favorite among Foreign Institutional Investors (FIIs) lately, despite the global uncertainty and volatility. In recent weeks, net positive flows have been seen, and experts believe that this trend is likely to continue. So, what’s driving FIIs to bet big on Indian markets? In this blog post, we’ll explore the reasons behind this trend and what it means for the Indian economy.
Resilient growth
India’s economy has been growing steadily over the past few years, with a growth rate of over 7% in the last quarter. This resilience has made it an attractive destination for FIIs, who are seeking stable and growing economies to invest in. In a recent interview, Jay Kothari, Head of Institutional Equities at DSP Investment Managers, noted that India’s growth story is driven by a combination of domestic consumption, investment, and exports. He believes that India’s growth momentum is likely to continue, driven by structural reforms and a young population.
Diversified economy
India’s economy is diversified across various sectors, including IT, pharmaceuticals, automobiles, and finance. This diversification makes it less vulnerable to sector-specific shocks and more resilient to global economic downturns. In contrast, many other emerging markets are heavily reliant on a single sector, making them more susceptible to volatility. India’s diversified economy is a major attraction for FIIs, who can invest in a range of sectors to spread their risk.
Shifting global supply chains
The ongoing US-China trade tensions have led to a significant shift in global supply chains. Many multinational companies are looking for alternative suppliers and manufacturing bases, and India is emerging as a popular destination. The country’s strategic location, skilled workforce, and competitive labor costs make it an attractive option for companies looking to diversify their supply chains. This trend is likely to benefit Indian companies, particularly those in the manufacturing sector, and attract more FII investments.
US-China trade tensions
The US-China trade tensions have had a significant impact on global trade flows, leading to a surge in trade protectionism and tariffs. India is benefiting from this trend, as companies are looking for alternative suppliers and manufacturing bases. The country’s limited export exposure to the US and China makes it an attractive destination for companies seeking to diversify their supply chains. In fact, India’s exports to the US have grown significantly in recent years, driven by the country’s pharmaceutical and IT industries.
Net positive flows
Recent weeks have seen net positive flows from FIIs into Indian markets, with the country attracting significant investments in both equity and debt instruments. This trend is likely to continue, driven by the country’s resilient growth, diversified economy, and shifting global supply chains. In fact, Jay Kothari believes that inflows are likely to grow, driven by the country’s growth story and attractive valuations.
Conclusion
FIIs are betting big on Indian markets, driven by the country’s resilient growth, diversified economy, and shifting global supply chains. The ongoing US-China trade tensions have created new opportunities for Indian companies, particularly those in the manufacturing sector. With net positive flows seen in recent weeks, India is likely to remain a favorite among FIIs, making it an attractive destination for investors seeking stable and growing economies.
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Note: The article is based on the views and opinions of the expert interviewed, and may not reflect the views of the organization or the author.
