India’s share of overseas inflows into emerging markets (EMs) since 2008 has crossed the 50% mark, with more than $86 billion of the $1.55 trillion invested in EMs during CY08-CY14 coming here.
The sizeable inflows from foreign institutional investors (FIIs) have been responsible for taking the benchmark BSE Sensex from lows of 8,451 points in CY08 to lifetime highs of 25,735 on Wednesday. Since the 2008 lows, the Sensex has gained 174% in dollar terms.
After India, Taiwan (14.6%) and South Korea (13.9%) have cornered the major share of FIIs’ flows within EMs since 2008, attracting inflows of $22 billion and $21 billion, respectively. During this period, cumulative FII flows in Thailand have turned negative at $5 billion. Indonesia and Brazil have seen 7% each of the total FII flows, while Philippines has seen 3.9% of the total flows.
Experts say Indian markets have been the FII favourite as they have delivered the best return on equity (RoE). “Indian markets are trading at a premium compared to their EMs counterparts due to a higher RoE. India is likely to see even higher FII inflows with a strong government at the Centre. At the same time, other EMs are facing political and economic issues,” said UR Bhat, managing director, Dalton Capital Advisors.
- Soon You Could Get Plastic Currency Notes: Find Out More
- Ranveer Singh and Vaani Kapoor Starrer Befikre Gets A Thumbs Up
- Supreme Court Seeks Centre’s Response Over Various Issues Regarding Demonetisation
- Defence Minister Manohar Parrikar Writes To West Bengal CM Mamata Banerjee
- Bigg Boss 10 December 8 Review: Swami Om Feels Cheated, lashes Out At Gaurav For Jail Punishment
- South Korean President Park Geun-Hye Impeached Over Corruption Scandal
- Former Air Chief SP Tyagi Arrested In VVIP Chopper Scam
- After Congress Vice President Rahul Gandhi, Liquor Baron Vijay Mallya’s Twitter Account Hacked
- Find Out What PM Narendra Modi Told Cabinet Over Demonetisation Decision
- Home Minister Rajnath Singh Assures Safety Of All Tourists Stranded On Havelock Island
- Government To Waive Service Tax On Debit, Credit Card Transactions Of Up To Rs 2,000
- President Pranab Mukherjee Criticises Parliament Disruptions Over Demonetisation
- Pakistan International Airlines Flight Carrying Over 40 Passenger On Board Crashes
- Shah Rukh Khan On Raees Clash With Kaabil: It’s Impossible To Have A Solo Release In India
- US-President Elect Donald Trump Named TIME’s Person Of The Year 2016
The 30-share Sensex is currently trading at a one-year forward multiple of 13.9, above its long-term average valuations. YTD, the Sensex has outpaced EM peers with returns of more than 20% in dollar terms.
Analysts feel Indian markets don’t seem expensive compared to their EM peers. “Relative to EM, India does not appear expensive vs its history with MSCI EM. For example, optically, the MSCI India/MSCI EM PBV may seem above LT average, but the ratio is high largely because MSCI EM itself is trading at 20% discount to its LT average PBV,” Deutsche Bank said in a report.
YTD, FIIs have bought more than $9 billion worth of Indian equities. Since September 13, 2013, when Narendra Modi was named the BJP’s Prime Ministerial candidate, overseas investors have pumped in over $16 billion. Bhat adds that FIIs would be keenly watching the Budget to decide on their further allocation.
– Jash Kriplani | Mumbai