Jul 02, 2013, 10.30 AM IST
On average, Emerging Market-dedicated active funds are 3 percent overweight India due to being underweight China and Taiwan.
Notwithstanding the heavy foreign institutional investor (FII) outflows from Indian equities in June, active emerging market funds have been steadily upping their exposure to India since December 2012, says a note by brokerage house Kotak Securities.
Foreign funds net sold over Rs 11,000 crore of Indian shares in June , mainly due to concerns over a cutback in the Federal Reserve’s monetary stimulus and a falling rupee.
"The fund-weighted exposure to India by all Global Emerging Market funds (ETFs and non-ETFs) increased to record levels of 9.4% (from 8% in September 2012) predominantly due to active fund preference for the region. On average, EM-dedicated active funds are 3 percent overweight India due to being underweight China and Taiwan," said the Kotak note.
According to the brokerage, exchange traded funds (ETFs) tracking the MSCI EM Index cumulatively saw outflows of USD 14 billion over the past 12 weeks, with most of the redemptions being enforced in June 2013 (USD10 billion). Yet, ETFs benchmarked to the MSCI India Index and the Hang Seng Index logged net inflows amid the carnage.
The brokerage says that India can benefit if incremental inflows prefer active investment to passive investment.
Markets face resistance; Nifty likely to correct soon
After expansion comes contraction - this is the theme which the stock markets have begun to work on. This letter has been upbeat on the market. We still are, when it comes to the long term. The short term scenario may be different. For short term traders the strategy should be to take swing trades lasting one or two days, only on extremes.
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