Foreign funds poured more money into emerging markets such as China, South Korea, Brazil and Taiwan than into India in January. These institutional investors, including emerging market funds and exchange traded funds, invested $1.3 billion into Indian equities in January as net asset allocations into the nation’s stocks declined from the previous month. China recorded the highest foreign fund inflows of $5.6 billion in January among, according to Kotak Securities, driving the country’s main index by % . Brokers said funds may have reduced net allocations to India as the Sensex has risen almost 25% driven by foreign institutional flows to the tune of $25 billion. The Kotak Securities data on foreign fund inflows, sourced from US-based fund flow tracker, is different from that by Securities and Exchange Board of India (Sebi) because the market regulator’s data also covers a wider range of foreign investors including pension and sovereign funds.
But, market watchers track the foreign fund flow data by EPFR closely because countries such as China do not disclose FII flows. Sebi data shows foreign institutional investors put a little over $4 billion into Indian stocks in January. The unabated FII inflows raised concerns over whether the nation’s equities are overbought by FIIs. India looks the most overbought by foreign investors at 1.7% of market cap going by the ratio of net foreign buying over the past 12 months as a percentage of market capitalization, said Credit Suisse in a recent report. Foreigh fund flows into leading emerging markets in January
Country Fund flows ($-mn) Main Stock index gains/losses (%) India 1,299 2.4 china 5,659 5.13 South Korea 2,873 -1.76 Indonesia 500 3.17 Brazil 1,703 -1.95 Taiwan 1,546 1.95 Russia 1,070 4.88 Thailand 788 5.91