 "investments, foreign investors")
India's long-term growth potential and a politically stable environment are leading more geographies to raise their bets on the country.
Canada, which has historically not been a big investor in Indian equities, has seen its equity holding in listed Indian shares double in the past year and grow by more than 100 times in the past eight years.
The country is now the seventh largest investor in the India and stands a good chance of overtaking Norway, United Kingdom (UK) and Luxembourg to enter the top five league.
The country's holdings stood at around Rs 17,500 crore at the end of June 2017, from Rs 8,541 crore a year ago, data collated from Prime Database shows. It's holding amounted to a mere Rs 150 crore in 2009. The equity holding data collected by Prime Database is for investors holding at least one per cent stake in listed companies.
The benchmark BSE Sensex has risen 14.5 per cent in the one year to June, and doubled in the past eight years.
Illustration: Ajay Mohanty
India is seen as a bright spot among emerging markets, and its political stability, democratic set-up and growth prospects make it a safe bet for parking long-term money. The India story is better understood internationally now than a decade ago, say experts who add that there is a spurring interest in India from newer geographies.
Major Canadian investors include Canada Pension Plan Investment Board (CPPIB) and Caisse De Depot Et Placement Du Quebec (CDPQ), among others. The value of their combined equity holdings stood at Rs 15,600 crore at the end of June. Other notable investors include Ontario Teacher's Pension Plan and Mawer Investment Management.
"India's economic fundamentals remain strong, and we have seen continued growth in the economy over the past few years. We believe that India will be a leading source of global growth in the coming years and that there will continue to be attractive investment opportunities for a long-term investor like CPPIB," said Suyi Kim, head (Asia-Pacific), CPPIB.
Since it first invested in India in 2011, CPPIB's investments total over $5.8 billion Canadian dollars across listed and unlisted space. "We continue to focus on infrastructure, real estate, principal credit, private equity and public equities where we can work with strong local partners to meet our long-term target for India," added Kim.
An e-mail sent to CDPQ did not get a response.
According to UR Bhat, managing director at Dalton Capital Advisors (India), the country is now seen as a mainline investment destination rather than just part of the emerging market grouping. "The size of the market has become sufficiently large; the currency is steady; the fiscal situation is stable; and the country is politically a lot more stable than many of its emerging market peers. All these factors are attracting long-term money from pension and endowment funds as well as bringing in new investors," Bhat said.
Besides Canada, Japan's equity holdings have risen five times in the past one year to Rs 5,014 crore at the end of June, making it one of the top 10 investors in Indian equities. Japan's corporate and cultural familiarity with India is helping the country bet big on India. "Japanese firms such as Sony and Suzuki have tasted success in India and the country's investors are familiar with India's regulatory environment and aware of its future growth potential," observed Bhat.
To be sure, countries such as the US, Mauritius, Singapore, Luxembourg and UK remain the top investors in Indian equities. Between them, US and Mauritius together hold around Rs 3 lakh crore worth of Indian equities while Singapore, Luxembourg and UK together hold Rs 1.25 lakh crore.
Notably, India-focused offshore funds and exchange traded funds (ETFs) received net inflows of nearly $5 billion in the first six months of the year, the second highest in the past five years. The flow largely came into India-focused offshore funds, which signifies long-term money.
According to market watchers, India's weight in the MSCI EM Index will rise in the coming years and is expected to attract a higher quantum of overseas inflows into the country. "India is under-represented in the MSCI EM index, relative to its GDP, in the EM world. As India gains GDP versus the rest of the world its index weight will rise. As the index weight rises, foreign flows will get larger, and the equity market will attract larger quantities of opportunistic flows," said Ridham Desai, equity strategist, Morgan Stanley India.
At 27.5 per cent, FPI ownership at the end of June is at record levels, surpassing the previous high of 27.3 per cent in September 2016. Overall, FPI assets are valued at $395 billion.
