2 hrs ago
India Outflows Ease as Taiwan, South Korea Redemptions Rise
Some investment funds are taking less money out of India than they did in recent weeks.
They withdrew about $100 million from India-focused funds.
Funds investing in Taiwan and South Korea have recently withdrawn even more money.
This makes India look better compared with those markets, although India’s overall flow trend is still weak.
Long-term India funds have lost the money they had attracted since September 23.
Funds investing globally and in emerging markets continued to receive money.
Foreign portfolio investors also bought nearly Rs 30,918 crore of Indian shares in August.
Analysts linked these purchases to a stable rupee, better earnings growth and a reversal in chip-related trade patterns.
India-focused fund outflows slowed to about $100 million, down from $170 million, $270 million and $366 million in the previous three weeks.
Redemptions from Taiwan and South Korea recently exceeded those from India, improving India’s relative flow performance alongside China.
Long-only India funds continue to see outflows, reversing cumulative inflows recorded since September 23.
Global and GEM funds attracted another $10 billion and $1.5 billion, respectively, while United States-dedicated funds saw about $4 billion in weekly outflows for a third week.
Foreign portfolio investors bought nearly Rs 30,918 crore of Indian equities in August, marking their second consecutive month as buyers.
- Who
- Elara Capital, India-focused funds, foreign portfolio investors and funds investing in Taiwan, South Korea, China, the United States, global markets and emerging markets.
- What
- India-focused outflows moderated, while redemptions from Taiwan and South Korea increased relative to India; foreign portfolio investors bought Indian equities in August.
- Where
- India and other markets including Taiwan, South Korea, China and the United States.
- When
- The report was issued on Friday; the August purchases were the second consecutive month of FPI buying, and the relative flow comparison covers roughly the past two months.
- Why
- Analysts cited the reversal of the chip trade, rupee stability and improving earnings growth in India as drivers of FPI buying; the report said crowded positioning contributed to closer scrutiny of Taiwan and South Korea flows.
Absolute Weakness
Relative Improvement
India’s fund-flow position
Absolute Weakness
India’s flow trend remains weak because long-only funds continue to record outflows, and cumulative inflows since September 23 have been fully reversed.
Relative Improvement
India’s relative position has improved because recent redemptions from Taiwan and South Korea exceeded India’s outflows.
Broader investor activity
Absolute Weakness
United States-dedicated funds recorded approximately $4 billion in outflows per week for the third consecutive week, showing continued pressure in some strategies.
Relative Improvement
Global and GEM funds continued to attract capital, while foreign portfolio investors bought nearly Rs 30,918 crore of Indian equities in August.
Key facts
- India-focused outflows
- About $100 million, down from $170 million, $270 million and $366 million in the previous three weeks.
- United States-dedicated funds
- About $4 billion in weekly outflows for the third consecutive week.
- Broader allocation funds
- Global funds attracted another $10 billion and GEM funds attracted $1.5 billion.
- August FPI purchases
- Nearly Rs 30,918 crore of Indian equity, including Rs 18,790 crore through exchanges and Rs 12,128 crore through primary-market and other transactions.
- India FPI trend
- August was the second consecutive month in which foreign portfolio investors were net buyers.
- Industrial index warning
- The Global Industrial index returned to its 200-day moving average; a decisive break below it could raise the risk of a sharper sell-off.
Quotes
Elara Capital report
Investment research report assessing fund flows and market conditions
“Long-only funds in India continue to record outflows, with cumulative inflows since September 23 now fully reversed. India's flow trend therefore remains weak in absolute terms, but the relative picture is improving.”
thehansindia.com
“A decisive break below this zone could increase the risk of a sharper sell-off, given the precedent of previous breaks.”
thehansindia.com
Sources
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