New Delhi, November 16 (IANS). After heavy selling by foreign institutional investors (FIIs), it is expected that FIIs will reduce their selling at the end of the calendar year.
On Saturday, experts said new investments or allocations are likely to take place once there is more clarity about the policies of the Donald Trump administration. The selling by FIIs in the Indian stock market was driven by weak earnings, high valuations compared to other markets and global economic influences such as rising US bond yields.
“Some selling by FIIs in the secondary market is being balanced by buying through large initial public offerings like Swiggy and Hyundai in the primary market,” said Vipul Bhowar, senior director (listed investments), Waterfield Advisors. “FIIs will reduce their selling towards the end of the calendar year.” New allocations or significant investments are likely to happen once there is more clarity about the Trump administration’s policies.
“In the financial sectors, FPIs are increasing allocation to capital markets themes like asset management, exchanges and healthcare,” he added. FPIs became net sellers in October, pulling out $11.5 billion (across equity, debt and hybrid categories), compared to inflows of $11.2 billion in September.
According to a latest CRISIL report, the equity market witnessed a record-high net outflow of $11.2 billion (against an inflow of $6.9 billion last month) in response to the surge in Chinese equities following the announcement of fiscal stimulus measures. Despite FII outflows, domestic financial conditions in India remain in the comfort zone.
Experts said the new framework set up by RBI and SEBI to reclassify foreign FPIs as FDI is expected to have a positive impact on foreign inflows into India. This framework provides greater flexibility for foreign investors and lowers barriers to entry.
Bhowar said, “With the new rules, FPIs can hold larger stakes in Indian companies without the need for immediate disinvestment. This creates opportunities for increased foreign investment, especially in mid-cap companies and helps in attracting long-term capital. Help is available.”
–IANS
SKT/CBT
