Foreign portfolio investors (REITs) injected a net sum of Rs 49,553 crore into Indian markets this month thanks to high liquidity coupled with improving global indicators and clarity following the US presidential elections.
REITs invested Rs 44,378 crore in stocks and Rs 5,175 crore in the debt segment, bringing the total net investment to Rs 49,553 crore between November 3 and 20.
In October, REITs invested a net sum of Rs 22,033 crore.
According to Harsh Jain, co-founder and COO at Groww, high liquidity coupled with improving global economic indicators and the clarity of the US presidential election are driving the REIT’s investment.
In addition, “with improving global trade and the world’s economies showing green shoots, investors are increasingly comfortable investing in emerging markets like India,” he added. .
Echoing the views, Rusmik Oza, executive vice president of basic research-PCG, Kotak Securities Ltd, said the flows accelerated after the U.S. election results as investors around the world expect to that the dollar weakens further in the future.
“The Federal Reserve and other central banks like the ECB and BoE are expected to take more monetary action to tackle the second wave of COVID. This would lead to a greater infusion of liquidity in the markets. global, ”Oza added.
Making a comparison between other emerging markets, Rusmik Oza said the REIT flows to South Korea and Taiwan are closer to what India has received.
“It is interesting that China, after registering very strong inflows in the previous two months, has recorded net outflows of $ 16.5 billion this month to date,” Oza added.
Regarding the future of REIT flows, he said that expectations of a weaker dollar and higher liquidity should lead to more entry into emerging markets and that India is one of the preferred markets in this area.
Factors like a higher than expected profit jump, a faster recovery on the ground, and a stable currency in India are also contributing to REIT inflows.
REITs have been net buyers in Indian stock markets on almost all trading sessions except a few in November, noted Himanshu Srivastava, associate director – research director, Morningstar India.
Going forward, Srivastava said domestically the biggest challenge will be to further reduce COVID cases, effectively manage the expected second wave of infections and get the economy back on the growth path. There has been an improvement in the macroeconomic scenario which has so far ensured that the FPI flow remains intact.
Globally, concerns about the rise in coronavirus infections in several parts of Europe and the United States could make investors risk averse if the situation deteriorates. That said, maintaining the accommodative stance of global central banks can ensure the flow of foreign investment to emerging markets, including India, Srivastava added.