Business Standard

Popularity of Indian equity at 11-month low: Survey

BofA-ML global fund manager study says investors 11% underweight on Indian stocks in November, down from about 5% in the previous month

Related News

The popularity of Indian equities among global fund managers slumped to an in November, hot on the heels of India emerging as Asia’s top investment destination.

According to a (BofA- ML) global fund manager survey, in November, investors were 11 per cent underweight on Indian stocks. While BofA-ML did not give any reason for the sudden investor aversion to Indian stocks, analysts said premium valuations to most other emerging markets, following the market rally this year, and no improvement in economic parameters could have led to the aversion.

“Data on India’s industrial output growth suggest the economy is facing severe supply-side constraints, which is leading to the odd combination of weak domestic output, high and sticky inflation and a widening trade deficit,” Nomura economists and said in their Asia Insights report. “Until the bottlenecks (land reforms, setting up the National Investment Board) are addressed, we expect India’s growth recovery to remain shallow, as the economy would be quick to hit a ceiling,” the report added.
 

LOSING APPETITE
  15-Nov-12 % change
Americas Close YTD
Mexico IPC  40,750.42 9.91
Brazil Bovespa  56,279.36 -0.84
Asia
SET (Thailand) 1,274.02 24.26
PSEi (The Philippines)  5,414.82 23.85
NSE 5,631.00 21.77
Sensex  18,471.37 19.52
Hang Seng  21,108.93 14.51
Jakarta Composite 4,351.28 13.85
Straits Times Index 2,945.92 11.32
Nikkei 225 8,829.72 4.43
Kospi  1,870.72 2.46
Taiwan Taiex 7,143.84 1.01
Shanghai SE Composite 2,030.29 -7.69
Source: Bloomberg                                          Data compiled by BS Research Bureau

While most other emerging markets are trading between eight and 11 times the estimated earnings, the is trading at 13.17 times. So far this year, benchmark indices have gained about 20 per cent. On Thursday, the Sensex closed at 18,471.37, a loss of 147.5 points.

In October, India had enjoyed an overweight position of about five per cent in the BofA-ML survey. It was ahead of South Korea, Malaysia, Taiwan, Indonesia and the Philippines. This month, net allocation to South Korea rose to a 21-month high, while China’s position improved from net 15 per cent overweight in October to 25 per cent in November.

The waning interest in Indian equities was reflected in the slowing of the rally in Indian stocks and the rupee. After hitting a high in the first week of October, India’s benchmark indices have lost about 3.5 per cent. In November, the rupee fell about two per cent against the dollar. On Thursday, it traded at 54.69 against the dollar, below October’s 54-levels.

However, the dwindling interest in Indian equities wasn’t reflected in foreign institutional flows into the country. So far this month, foreign investors have pumped in about Rs 3,400 crore, raising their net purchases tally since January to Rs 97,000 crore. Though investors have taken note of the slew of pro-business measures recently announced by the government, there is increased realisation the benefits of these reforms would accrue only over a period. In a report, Credit Suisse said, “The change (economic reforms) is encouraging and the worrying anti-business rhetoric seems firmly behind us. However, it may take six to eight years from reform intent to impact, and the investment cycle is unlikely to recover for the next three to four years.”

Read more on:   
|
|
|
|
|
|
|

Popularity of Indian equity at 11-month low: Survey

BofA-ML global fund manager study says investors 11% underweight on Indian stocks in November, down from about 5% in the previous month

The popularity of Indian equities among global fund managers slumped to an 11-month low in November, hot on the heels of India emerging as Asia’s top investment destination.

The popularity of Indian equities among global fund managers slumped to an in November, hot on the heels of India emerging as Asia’s top investment destination.

According to a (BofA- ML) global fund manager survey, in November, investors were 11 per cent underweight on Indian stocks. While BofA-ML did not give any reason for the sudden investor aversion to Indian stocks, analysts said premium valuations to most other emerging markets, following the market rally this year, and no improvement in economic parameters could have led to the aversion.

“Data on India’s industrial output growth suggest the economy is facing severe supply-side constraints, which is leading to the odd combination of weak domestic output, high and sticky inflation and a widening trade deficit,” Nomura economists and said in their Asia Insights report. “Until the bottlenecks (land reforms, setting up the National Investment Board) are addressed, we expect India’s growth recovery to remain shallow, as the economy would be quick to hit a ceiling,” the report added.
 

LOSING APPETITE
  15-Nov-12 % change
Americas Close YTD
Mexico IPC  40,750.42 9.91
Brazil Bovespa  56,279.36 -0.84
Asia
SET (Thailand) 1,274.02 24.26
PSEi (The Philippines)  5,414.82 23.85
NSE 5,631.00 21.77
Sensex  18,471.37 19.52
Hang Seng  21,108.93 14.51
Jakarta Composite 4,351.28 13.85
Straits Times Index 2,945.92 11.32
Nikkei 225 8,829.72 4.43
Kospi  1,870.72 2.46
Taiwan Taiex 7,143.84 1.01
Shanghai SE Composite 2,030.29 -7.69
Source: Bloomberg                                          Data compiled by BS Research Bureau

While most other emerging markets are trading between eight and 11 times the estimated earnings, the is trading at 13.17 times. So far this year, benchmark indices have gained about 20 per cent. On Thursday, the Sensex closed at 18,471.37, a loss of 147.5 points.

In October, India had enjoyed an overweight position of about five per cent in the BofA-ML survey. It was ahead of South Korea, Malaysia, Taiwan, Indonesia and the Philippines. This month, net allocation to South Korea rose to a 21-month high, while China’s position improved from net 15 per cent overweight in October to 25 per cent in November.

The waning interest in Indian equities was reflected in the slowing of the rally in Indian stocks and the rupee. After hitting a high in the first week of October, India’s benchmark indices have lost about 3.5 per cent. In November, the rupee fell about two per cent against the dollar. On Thursday, it traded at 54.69 against the dollar, below October’s 54-levels.

However, the dwindling interest in Indian equities wasn’t reflected in foreign institutional flows into the country. So far this month, foreign investors have pumped in about Rs 3,400 crore, raising their net purchases tally since January to Rs 97,000 crore. Though investors have taken note of the slew of pro-business measures recently announced by the government, there is increased realisation the benefits of these reforms would accrue only over a period. In a report, Credit Suisse said, “The change (economic reforms) is encouraging and the worrying anti-business rhetoric seems firmly behind us. However, it may take six to eight years from reform intent to impact, and the investment cycle is unlikely to recover for the next three to four years.”

image

Read More

Sebi exempts CARE Ratings from IPO grading process

The Securities and Exchange Board of India (Sebi) has exempted rating agency Credit Analysis and Research (CARE Ratings) from the mandatory grading ...

Recommended for you

Advertisements

Quick Links

Market News

Earning numbers to guide markets, land and GST bills eyed too

Foreign fund inflows trend and movement of rupee would also influence trading

India's coffee exports up by over 7.22% in Apr

The country had shipped 28,966 tonnes of coffee in the same period last year

MAT effect: FPI inflows hit 4-month low of Rs 15,000-cr in April

Bought shares worth Rs 11,721 cr ($1.87 bn) in April

Top 9 Sensex cos lose Rs 66k cr in market valuation

The m-cap of ITC slumped Rs 19,958 cr to Rs 2,58,300 cr, taking the steepest hit among the top-10 firms

MF asset base from smaller cities up 36% at Rs 1.89 lakh cr

Huge compensation to distributors, investor awareness and education programmes by MFs key triggers

 

Back to Top