Foreign investors upgrade India as dedicated allocation in investment portfolios

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Singapore, December 4

Foreign investors have upgraded India as a dedicated allocation in their investment portfolios given the strong economy, stable government and significant reforms undertaken over the last eight years, equity experts have said.

According to the experts who participated in Futures Industry Association (FIA) Asia trade conference held in Singapore from November 29 to December 1, investment is flowing into India's growth story.

Previously, the investors had grouped India within emerging markets and comparatively only China was a "dedicated allocation" emerging market, according to Anant Jatia, Founder and CIO at Greenland Investment Management LLP in Mumbai.

"Investment is flowing into India's growth story. We see investments being redirected as FPIs reposition their dollars amidst uncertainties in China," Jatia said on the sidelines of FIA Asia, 2022.

"We are seeing the current pickup gaining momentum as FPIs have turned net buyers of India with over USD 5 billion coming in over November and early December relative to the USD 23 billion they pulled out over the first ten months of 2022," Jatia added.

He said the flip is impressive considering the cost of liquidity has gone up significantly with the Fed Funds Rate, currently at 3.83 per cent.

Sunil Sachdeva, a Singapore-based stock market expert with focus on Indian equities, said that the Indian stock markets have shown good resilience in recent months, and hit a new growth trajectory though some of the leading global markets are down by 15-20 per cent due to the economic uncertainties.

"This resilience has come from good government regulatory reforms, RBI's sharp eye on the economy with supportive policies and a good level of domestic consumption," Sachdeva, who is also the Treasury Director of Safron Pte Ltd, a family office based in Singapore, said.

"The Indian markets have entered into a new trajectory. The indices are at an all-time high," he said.

Sachdeva said this is just a start of a multi-year growth cycle and it is time to stay invested.

"We have seen very large interest in India as a market at the FIA event here and everyone wants a pie of Indian stocks. International and domestic investors want to be part of the Indian growth story," he said.

He said in India there is a political certainty attracting the investments, stability and the government policies look good.

"Funds through Foreign Portfolio Investors are flowing into India. Today, India has over 10 crore of dematerialised (demat) accounts. Just imagine the growth potential, if the demat accounts grow to 20-30 crores in the coming decade," said Sachdeva.

Domestic investors are moving their low-interest rate fixed deposits from banks to the higher return stock market, where major industrial sectors, such as listed companies from infrastructure, auto and banks have reported a good level of profitability in the second quarter.

India equities have outperformed international markets.

"We are seeing Indian equities growing 7 per cent year on year return while comparatively, the US markets are down 14 per cent," he said.

Sachdeva believes the Indian equity market could grow up to 5-8 per cent year on year.

Sachin Gupta, who is the CEO of Noida-based firm Share India, said young professionals, in the 25-30 age group, and some of them from Tier-III cities, have started investing in the stock and shares.

Priyanka Sachdeva, who is a market analyst at Singapore's Phillip Nova Pte Ltd, said strong domestic demand and government are pushing the manufacturing sector in a bid to make India more self-reliant and reduce import dependability.

The Tribune