Business

After 2018 exodus, FIIs likely to return in 2019: Experts

Agency | January 03, 2019 12:35 PM

MUMBAI: After a massive exodus of foreign funds from the country's capital market segment in 2018, analysts anticipate a recovery in inflows on the back of robust corporate earnings and resolution of the ongoing liquidity crisis.

 

 

Experts are of the opinion that foreign fund outflows last year was due to rise in US interest rates, global trade wars and the state elections.

According to SMC Investments & Advisors CMD D.K. Aggarwal: "We strongly believe that foreign investors would return to Indian equities in the 2019."

"The testimony to this is that they have already been biased towards the end of 2018 because the Indian economy is expected to do well in light of fall in crude prices, governments' strong determination to push an agrarian economy, bottoming out of problems with respect to NPA's in the banks etc."

In 2019, Brijesh Ved of BNP Paribas said that recovery of earnings and a likely high economic growth rate will lead foreign investors back to India.

"India is likely to be amongst the fastest growing among the EMs. We believe stable government formation in 2019, coupled with earnings recovery can lead to an increase in FII flows into India during 2019," Ved said.

The exodus of funds has been worrying for the country's equity market as India's dependence on them has only grown over the years. A decline means that investors are turning towards other high-yielding instruments.

The domestic investments, however, remained healthy in 2018. The trend is expected to continue this year and further insulate the capital markets.

"We believe that given the low penetration of equities amongst Indian households, increase in the financialisation of savings and improved earnings outlook will be drivers for stable flows from domestic investors into equities," Ved added.

The FII outflow trend was strongly visible in 2018 and the key reasons for the outflow, analysts said was the increase in US treasury yields following a reversal of "Quantitative Easing" as interest rates were raised.

The NSDL data showed that Foreign Portfolio Investors (FPIs) sold Rs 80,919 crore worth of equities, debt and hybrid instruments in 2018. The equity segment alone accounted for Rs 33,014 crore in outflows, the highest in a decade.

This was second only to 2008, when the financial markets across the globe plunged into deep recession.

FII investment in the capital market segment saw the second worst outflow ever in 2018, next just to 2008, when the financial crisis rocked the global markets.

FIIs have been net sellers only on three occasions since 2002.

Have something to say? Post your comment
Must Read
Smuggling through border cannot be fully stopped, says BGB
Smuggling through border cannot be fully stopped, says BGB
'Batla House': Nora Fatehi steals the show with recreated version of 'O Saki Saki'
'Batla House': Nora Fatehi steals the show with recreated version of 'O Saki Saki'
Kumar Keshav, the man behind success of Lucknow Metro
Kumar Keshav, the man behind success of Lucknow Metro
 DC Exhorts students to be Ambassadors of conserving the water table in District by participating Zealously in ‘Jal Shakti Abhiyan’
DC Exhorts students to be Ambassadors of conserving the water table in District by participating Zealously in ‘Jal Shakti Abhiyan’
Nutritious and Delicious Kiwifruit from Chile makes deeper inroads into Indian Market
Nutritious and Delicious Kiwifruit from Chile makes deeper inroads into Indian Market
Defence Min issues Rs 2000 cr tender for critical heavyweight torpedoes for submarines
Defence Min issues Rs 2000 cr tender for critical heavyweight torpedoes for submarines
I will come to India in another 24 hours: IMA founder Mansoor Khan
I will come to India in another 24 hours: IMA founder Mansoor Khan
Maharani The Kitchen offers you the Best Royal Cuisine in Delhi/NCR
Maharani The Kitchen offers you the Best Royal Cuisine in Delhi/NCR
Rohit Sharma feels cricket rules need 'serious look in'
Rohit Sharma feels cricket rules need 'serious look in'
I'm not a perfect role model, says Neymar
I'm not a perfect role model, says Neymar
No proposal under govt's consideration for special category status to Odisha: Anurag Thakur
No proposal under govt's consideration for special category status to Odisha: Anurag Thakur
Pro-Khalistani leaders continue to hold key positions in PSGPC
Pro-Khalistani leaders continue to hold key positions in PSGPC