New Delhi: Foreign investors have cut their ownership of Indian equity over the past few months, but domestic mutual funds, banks and insurance companies have helped put the floor under the market with their purchases.
According to data from the Stock Exchange in the National Stock India, foreigners sold $ 7.24 billion between October 1 and January 25, but domestic Indian institutions bought $ 9.63 billion in that period.
Analyst said the increase in domestic investment was caused by a surge in retail interest in the equity market when the country’s young investors chose shares on other traditional assets.
“People began to see increased income and put more money in investment for their future and there was a greater willingness to hold assets such as equity.
Some decades ago Most people will only save cash, jewelry or property,” said Herald Van Der Linde, head of the Asian equity strategy in HSBC.
“Therefore, we see sustainable buying from retail investors.
They buy ETF, Dana, and Pick Stock themselves too.” Data from the Association of Mutual Funds in India showed a fund of collecting 328 billion Indian Rupees ($ 4.38 billion) through a systematic investment plan (gulp) in the fourth quarter of 2021, which was 40% higher than a year earlier.
SIPS is more popular among retail investors because it allows them to invest regularly, and the return is less fluctuating than the investment of discretionary lump sum.
This domestic support can protect the Indian market against global volatility because the US Federal Reserve will be determined to increase interest rates quickly in an effort to combat higher inflation.
Many developing market stock indices have slumped in recent weeks when foreigners sell market risk aggressively, while pursuing higher US results and preparing to hit revenue.
However, the Indian Nifty Index has shed only 2% so far this month, compared to the decline in MSCI Asia-Pacific Index by 5%.
Some analysts said higher Indian stock assessments could block foreign investors, but domestic investors would continue to accumulate shares.
According to refinitiv data, a large and medium and medium-sized price-to-inder stocks ratio in India stands at 20.1, the highest in Asia.
“In India’s alternative assets on hedging inflation are difficult to find, which, we believe, explain the favorite of investors for equity,” said Manishi Raychaudhuri, an Asia-Pacific equity strategist at BNP Paribas.
“The situation seems unlikely to change in the medium term, implying that domestic institutional investment flows can continue to remain a fortress to the market.”