1 week ago
Foreign Investor Flows Show Early Signs of India Turnaround
Foreign investors had been selling Indian stocks for several months.
Their selling was especially large in March, when outflows were about $10.4 billion.
Selling continued in April, May, and June.
In July, foreign investors started putting money back into the market.
This may mean that the biggest part of the selling period is over.
Indian mutual funds kept buying during the same period.
Their buying helped support the market while foreign investors were cautious.
The report says the situation could be the beginning of a recovery, but it describes this only as an early sign.
Foreign investor outflows weakened sentiment between March and June, peaking at about $10.4 billion in March.
Foreign selling continued through April and May before intensifying again in June.
Foreign investor flows returned to positive territory in July, suggesting the unwind may be easing.
Domestic mutual funds remained steady buyers and helped absorb some foreign selling pressure.
India-dedicated foreign flows are near historically weak levels that previously preceded market and flow recoveries.
- Who
- Foreign institutional investors and domestic mutual funds.
- What
- Foreign investor flows showed a possible turnaround after months of selling, while domestic mutual funds continued buying.
- Where
- Indian equities and India-focused investment flows.
- When
- Foreign outflows occurred mainly from March through June, with inflows returning in July.
- Why
- The report attributes the potential improvement to returning foreign inflows, resilient domestic participation, and historically weak foreign positioning.
Key facts
- March FII outflows
- About $10.4 billion.
- Foreign flow trend
- Outflows occurred from March through June; flows returned to positive territory in July.
- Domestic mutual funds
- They remained consistent buyers during the foreign selling period.
- Flow data coverage
- The data includes foreign institutional investor and domestic mutual fund flows, including exchange-traded funds, but excludes arbitrage flows.
- Foreign positioning
- India-dedicated flows as a percentage of free-float market capitalization are approaching historically weak levels.
- Historical comparison
- The report says similar flow troughs occurred around the December 2020 Covid collapse and the trough of the Nano-Bon rally.
Sources
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