INSUBCONTINENT EXCLUSIVE:
Foreign institutional investors (FIIs) are on the sidelines in wait and watch mode ahead of the crucial general election outcome next week
and amid reports of slowdown in global economy and waning risk appetite due to the US-China trade war.
FIIs have invested a net of $147.88
million in Indian shares so far this month, after being net buyers to the tune of $10 billion in the preceding three months, largely on the
back of improving global liquidity after central banks opted for dovish policy stance.
Equity benchmark BSE Sensex has eroded more than 5
per cent of value so far this month.
Earlier this year, India got its fair share of FII money with flows increased to emerging markets as a
selling Indian assets probably for two reasons
By far the most important one is the overall worrisome environment for emerging market assets due to the escalation in the US-China trade
All EM assets are being dumped
culminating in a deal by year end, a Bloomberg report said.
A Bloomberg News survey on Monday showed a majority of 40 economists see Trump
following through on his threat to impose additional 25 per cent tariffs on all remaining imports from China, with a plurality expecting
those higher levies by third quarter.
The second reason for the selloff in Indian equity could be the impending election outcome
The seventh and the last phase for polling will be held on May 19, and votes will be counted on May 23.
There have also been concerns over
the domestic GDP number, as key data used to compute GDP under the new method are now turning out to be patently dodgy, said a report
quoting the National Sample Survey Office (NSSO).
Bakkum said NNIP has been reducing its exposure to emerging markets, which means they have
sold Indian shares as well
On the elections, we feel the result will not be a shock for the markets
So that is something keeping FIIs away from the market for some time
They are adopting a wait and watch stance
