Even though China remains the 'only game in town', Brandt added that India's inflows still remain in a 'healthy position', as most of the money is coming at the expense of Europe.
The flight to safety had intensified on Friday, August 2, after weak US economic data triggered worries that the US Fed may have been behind the curve in cutting rates and will now likely need to ease monetary policy aggressively to head off a recession.
India will continue to attract foreign funds because many forecasts for the developed world, especially Europe, for the end of the year and into the next year make somewhat gloomy reading, said Cameron Brandt of EPFR Global
The long only funds into India are still cautious but the tide is slowly beginning to turn encouraged by recent Budget, says Cameron Brandt, Director-Research, EPFR Global.
Chinese markets have been dropping sharply for the last month, with the Shanghai composite index down by a third over the last three weeks and dropping 5.9% today.
Emerging markets have seen record outflows, according to new data from fund flow tracker EPFR Global, which showed that funds from the region this week were hit with the worst outflows since 2008.
According to the global financial services major, after two consecutive months of sell-offs, FIIs have warmed up to Asian equities and all markets have received positive flows in November.
Rishav Dev of Quant is not too worried about the decline in fund flows in September. He says maybe the magnitude of flows has slowed, but it is inflows nonetheless. Moreover, he adds, global factors are in India's favour.
n its quarterly review, the Bank for International Settlements said the selloff that rocked emerging economies last year was a reminder of how "the activity of large asset managers can significantly affect small and illiquid asset markets".
"China remains the most over-owned market in the region, followed by India," the global brokerage firm said.
The Federal Reserve will begin tapering its $85 billion-a-month money-printing programme this month, and emerging markets are seeing foreign investment pull back as a result.
In the last couple of days China came out with some sweeping reforms. Many market experts are worried that the incremental flows might now move to China vis-Ã -vis India. Cameron Brandt, Director of Research at EPFR Global feels the reforms will be perceived as being positive for Asia, minus Japan.
According to funds tracking company EPFR Global, USD 12.18 billion has flown out of emerging markets equities funds during the third quarter of 2013. It noted that emerging markets equity funds posted back-to-back quarterly outflows for the first time since the second half of 2011.
Cameron Brandt of EPFR believes that FII outflows from EM equity and bond funds are bottoming out. Trend of economic data from emerging markets will determine trend of flows, he tells CNBC-TV18.
Investors pulled out a record of USD 23.3 billion out of the funds in the prior week and invested USD 2.11 billion to bond funds in the latest weeks, a data from EPFR Global showed on Friday.
In an interview to CNBC-TV18, Cameron Brandt, Director - Research, EPFR Global said that the FII outflows from emerging markets had seen a moderate reduction. He added that India had seen an outflow of USD 12 million on the last day of the last week.
In the past few weeks the Indian market has been losing its nerve and falling extensively. Most market analysts see sell of exchange traded funds (ETFs) as one of the main reasons for this weakness.
Cameron Brandt, senior analyst, EPFR Global explains on CNBC-TV18 that incremental funds from bonds have begun to flow into GEM equities followed by Asian equity funds led by China. Brandt adds that energy funds, which lost investor-interest have begun to witness a return of interest from the bulls.
Emerging markets have seen healthy fund flows over the past few weeks and Brad Durham, MD of EPFR Global said the total cumulative flows in the equity funds is about USD 17 billion year-to-date.
Investors poured the most money into bond funds globally in over a decade while fleeing equity funds in renewed worries over the strength of the global economic recovery and spillover effects of the eurozone crisis, data from EPFR Global showed on Friday.
Brad Durham, the managing director of EPFR Global, tells CNBC-TV18 that flows over the past week into emerging market equities have thinned out because of the anticipation of a correction.
Going into 2012, Brad Durham, managing director of EPFR Global says emerging market equities have materialized as the darling asset class of investment banks and market forecasters.
Brad Durham, managing director of EPFR Global pointed out that India will fair well if inflows are positive into emerging market equities. However, he elucidated that India still tends to have the reputation among investors as being one of the more expensive markets.
In an interview to CNBC-TV18, Brad Durham, managing director of EPFR Global said, there has been an intensification of the outflows from EM equity funds. “Over a 10-12 week period we have seen strong and consistent outflows.”
Markets across the world are reeling under pressure on the talks that double dip recession may hit the markets again. Cameron Brandt, director of research at EPFR Global, in an interview with CNBC-TV18's Reema Tendulkar gave his views on how the global markets will pan out going forward.