The Indian equity market has seen FII inflow of over Rs 2700 crore in the past five trading session. Discussing the current trend, Rishav Dev, Equity Strategist, Quant Capital - Institutional Equities, said he believes the inflow will continue for another few weeks.
He said Asia (ex-Japan), looks the only stable region amidst emerging markets, which is seeing the largest inflows from Japan and the US. Dev said there have been outflows seen from Russian funds to China and India. Even the European equity funds are seeing outflows for the last 7-8 weeks.
Below is the transcript of Rishav Dev's interview with Ekta Batra & Anuj Singhal on CNBC-TV18.
Ekta: This would the fifth consecutive trading session yesterday that we have seen foreign institutional investors (FII) inflows come through over 2,700 crore in the past five trading sessions. According to you do you expect that momentum to continue from the FII stable?
A: I feel that the current trend should continue for another few weeks. The reason for that being that if you look at different emerging market countries or emerging market regions Latin America, Europe, Middle East and Africa (EMEA), Asia ex-Japan and Global Emerging Markets (GEMs), which are the four main regions in emerging markets, Latin America is looking weak. In Brazil, elections are due, in Mexico the turnaround story hasn’t picked up and in EMEA there are problems with Russia and Ukraine and the Middle East crises which is also going on.
Therefore, Asia ex-Japan is the only region which is very stable as of now and the countries within Asia ex-Japan or the BRIC funds, India is getting a sizeable portion of that inflow especially BRIC funds; we are seeing consistent outflow from Russia and inflows into India and China; Brazil still seeing outflows. So, this trend will remain as it is, India will see consistent inflows in the coming months.
Anuj: In terms of flows that we have seen from different geographies, if you have some details on what part of globe is sending the highest amount of money to India. Is it coming from Europe, is it coming from North America or from the eastern parts, if you could tell us that.A: It is difficult to pinpoint a region from where the money is coming but I was going through the Japanese ministry of finance data this morning and I saw a trend which is new. Basically in the last eight weeks the Japanese investors investing in foreign securities has increased substantially. Therefore, in the last eight weeks alone they have invested close to 9.6 billion into foreign securities whereas if you look at the data from January till mid-June, they were net sellers of foreign securities on the equity path. So, my sense is that we might see Japanese investor investing into emerging market – that would be a big chunk. US resident investing in emerging market would be another big chunk and another point we have to be careful about is the way European equity funds started the year with lot of inflows – that has completely stopped. So, European equity funds have been seeing outflows for the last seven-eight weeks.
The last week’s data was USD 3.7 billion which is the highest in last two years in terms of outflow. So, emerging market as a region, across the globe at least for the last three-four weeks that is seeing maximum inflows and I think that the majority of the money is coming from Japan and US.
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