An amount of US$7.6 billion has been invested by foreign investors in the first five months of 2015 into Indian markets, which saw the first monthly outflow in May this year.
Markets such as Korea and Taiwan have become more attractive witnessing inflows of USD 1.5 billion and USD 1 billion respectively, making foreign investors pull away from India. With the prospect for equity outflows increasing, the foreign positions are looking expanded , as per an HSBC report, says ET. On the other hand, reports suggested that the Chinese stock market was heating up and could witness some outflows which could augur well for India.
An amount of US$7.6 billion has been invested by foreign investors in the first five months of 2015 into Indian markets, which saw the first monthly outflow in May this year.
“Equity outflows have started, with the market (Indian) experiencing the first monthly outflow in 2015. We expect this trend to continue as other markets become more attractive," HSBC said.
Owing to pressure on corporate earnings, expensive valuations, high fund exposure, and weaker currency and waning hopes for any further rate cut, HSBC had reduced India’s rank from being ‘overweight’ to ‘underweight’ on May 13.
Recently, it stated that India is still the most overweight market in the region in terms of the holdings of overseas investors. “This is also reflected in high valuations - at a 12-month fwd PE of 17.1x, the market is trading at a 17% premium to its five-year average. Investors have started to take money off the table in India but it is still an overcrowded trade. We believe that valuations need to adjust downwards,” HSBC stated.
“As a result we stay underweight on Indian equities. In the current scenario, sectors we like are capital goods, private banks, power and metals and sectors we would avoid are IT, real estate and healthcare,” the brokerage added.
An amount of US$7.6 billion has been invested by foreign investors in the first five months of 2015 into Indian markets, which saw the first monthly outflow in May this year.
“Equity outflows have started, with the market (Indian) experiencing the first monthly outflow in 2015. We expect this trend to continue as other markets become more attractive," HSBC said.
Owing to pressure on corporate earnings, expensive valuations, high fund exposure, and weaker currency and waning hopes for any further rate cut, HSBC had reduced India’s rank from being ‘overweight’ to ‘underweight’ on May 13.
Recently, it stated that India is still the most overweight market in the region in terms of the holdings of overseas investors. “This is also reflected in high valuations - at a 12-month fwd PE of 17.1x, the market is trading at a 17% premium to its five-year average. Investors have started to take money off the table in India but it is still an overcrowded trade. We believe that valuations need to adjust downwards,” HSBC stated.
“As a result we stay underweight on Indian equities. In the current scenario, sectors we like are capital goods, private banks, power and metals and sectors we would avoid are IT, real estate and healthcare,” the brokerage added.
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