India Post Brexit: Half-A-Billion Dollars Stocked By Foreign Investors
BENGALURU: The fears of Brexit's adverse impact on the Indian market has been put behind by the Foreign Investors as $551 million has been pumped into stocks and debt assets in the first 10 days of the month. This strong inflow of funds is succeeded by a $377 million outflow in June and $276 million in May as reported by The Times of India.
It was on June 24, that UK through a referendum chose to exit the EU which grew massive fears of fund outflow from emerging markets all across the globe including India. This also resulted in stock markets around the world witnessed a massive sell-off. The sensex lost over 600 points and even Indian currency, rupee weakened more than 1 percent to fall below 68 to a dollar level.
Although as soon as global investors realized that India was a bright spot among markets with slowing or stalled economic growth and negative interest rates, the situation changed completely. "FII data clearly show that India has actually benefited after the Brexit. Fears of outflow of money seemed to be exaggerated and are now worn out from this data. It's good news for India and the prevailing situation in the country,” stated Arun Kejriwal, Director, KRIS, an investment advisory firm.
The total $551-million inflow was shown by Sebi Data, while the equities showed an inflow of $551-million. The remaining $115 million have come into debt papers. The debt reversal trend was significant even in the month of June which has meant that the equity flows have been positive for a few months now.
Debt market dealers have stated that the search for positive yields among global investors is prompting them to buy Indian bonds as yields in low-risk or risk-free papers in several of the developed markets are in the negative territory. As a result of this situation, bond prices in India have also rallied considerably.
The benchmark yield however on the 10-year paper closed at 7.34% level on Tuesday which is lower by 0.16% than its level as of June 24. Dealers have also pointed out that the yields on short-term papers have also fallen in the recent times as RBI has taken proactive moves for the infusion of liquidity into the system and reducing foreign fund flows.
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