Waiting for unprecedented FII equity outflows to reverse? The wait could be long
London-based financial advisory firm Elara Capital believes that there is a confluence of factors that could prevent FII liquidity from returning to Indian markets anytime soon.
“Rather risk of further FII supply can be higher,” the firm said in a note.
“In the past, Indian markets have always underperformed EMs after big FII selling since they influenced the prices. However, this time India’s outperformance remains at historic high. This is also resulting in incremental foreign liquidity moving into other underperforming EMs (largely China).”
The global firm pointed out that this was the only time when despite such a large order of overseas investment outflows from equities, the relative allocation of FIIs in Indian markets remained at a record high due to buying from domestic Institutional Investors and retail players.
More on: economictimes.indiatimes.com