India’s shrinking economy does not prevent foreign investors from pouring money into the nation’s stocks betting on a recovery.
International buyers invested $ 6 billion net in stocks in Asia’s third-largest economy in August, the most since March last year. That’s because all the other markets in the region except China saw net withdrawals for the month.
Part of this is a bet that Indian stocks will catch up after lagging behind the region’s benchmark so far in 2020 – the S&P BSE Sensex has underperformed the MSCI Asia Pacific Index in approximately 6.5 percentage points. Foreigners were also drawn to share in the sales of some of India’s biggest financial firms: ICICI Bank Ltd., Axis Bank Ltd., and mortgage lender Housing Development Finance Corp raised a combined total ($ 4.7 billion) for the month. past.
“We put India at the top of the list with China for returns on investments over the next 12-24 months,” said Nuno Fernandes, who helps oversee more than $ 2 billion in emerging market assets at GW&K. Investment Management LLC in New York. Shares in India represent one of the fastest growing areas in the world. “
Foreigners have remained net buyers even after Monday’s data showed that India’s economy contracted by a record 23.9% in the June quarter, adding $ 231 million net in the first three days. of September. Helping them look beyond the gloomy GDP data is the improvement in business activity since July after restrictions were eased.
“We need to look beyond the short term and consider companies that will benefit from normalization in economic activity and demand,” said Amit Goel, fund manager at Fidelity International. Goel, who oversees $ 1.6 billion in India Focus Fund, said it bought shares in private banks, a large commodities company and healthcare companies in the past three months.
Still, rapidly rising virus cases have dampened investor confidence. With a number close to 4 million, India is becoming the world’s newest virus epicenter.
“As long as the Covid-19 cases continue, localized lockdowns are likely to hamper economic recovery,” said Kristy Fong, Senior Director of Investments for Asian Equities at Aberdeen Standard Investments. Aberdeen has become “more defensive” as it expects a rather than a V-shaped recovery, “he said.
For the bulls, there are plenty of reasons to be bullish on Indian stocks.
“The worst is behind us and we are firmly headed for a recovery,” said Amit Shah, head of India equity research at BNP Paribas in a note on Thursday, citing improving car sales, heavy rains that will improve prices. Rural Wages and Relaxed Monetary Policy BNP expects Sensex to end the year at 41,500, 8% more than Friday’s close.
This story was published from a news agency feed with no changes to the text. Only the title has been changed.
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