Mumbai, November 20 (IANS). The rupee continued to remain strong with India’s strong economic infrastructure. A latest report on Wednesday said that strong GDP growth, controlled inflation, managed twin deficit and record foreign reserves kept the rupee strong despite foreign institutional investor (FII) outflows.
Most emerging markets witnessed FII outflows amid uncertainty over the US elections, geopolitical tensions in the Middle East, China’s stimulus announcement and rising US yields during October.
In India, these outflows were further exacerbated by the ongoing results season, which failed to justify valuations, Motilal Oswal Private Wealth (MOPW) reported.
The report noted that the improvement was more pronounced in sectors that had seen sharp rises over the past year, and particularly in companies that failed to meet market expectations on earnings.
However, despite FII outflow of $12 billion, the rupee maintained a flexible stance i.e. it remained stable as compared to earlier.
“Furthermore, India’s contribution to world market capitalization has increased from 1.7 percent in 2013 to 4.3 percent now and India has moved from 17th to 5th in terms of market capitalization ranking,” according to the report.
Equity as an asset class is also playing an important role in Indian household savings.
In the long term, the equity market trend has been positive due to corporate deleveraging and better earnings over the next two years.
“However, the risk of short-term volatility remains due to global uncertainties such as geopolitical issues, central bank policies and valuations,” the report further said.
Along with this, investors are advised to proceed carefully with a balanced strategy.
Those who have adequate equity allocation should maintain investments, while those with low allocation can gradually increase their investments.
In 3 months for large and multi-cap strategies and 6-12 months for select mid and small-cap strategies, faster investments can be made if there is a significant market correction.”
“The intersection of geopolitical developments and macroeconomic indicators will likely continue to drive volatility, making gold an attractive option for investors looking to reduce risk,” the report said.
–IANS
SKT/KR
