Foreign Institutional Investors dump debt, bulk up on Equity

Strategy of Global investor’s on Indian stocks and bonds is diverging where they bought $5.5 billion worth of Indian shares this year, among the very best in emerging Asian economies, while selling $1.8 billion worth rupee-denominated bonds. Harihar Krishnamoorthy said Growth of double digit forecasts are luring foreigners to Indian stocks, treasurer at FirstRand Bank in Mumbai. Bonds aren't that attractive given the negative returns and a large borrowing program, he said.

The Nifty 50 index touched the 13,000 level in the week. Since March 23 low, this benchmark up 70.7%. After such a steep run-up, many investors are worried today that a correction could remove the gains they need made within the markets to this point this year. High global liquidity some fundamental factors are answerable for the sharp turn around within the equity markets. Central banks across the planet have kept interest rates low and liquidity levels high. This has supported the expansion outlook for companies and sectors and helped sustain equity valuations. The markets witnessed the most effective Budget-day gain on February 1 after the presentation of minister of finance Nirmala Sitharaman’s “never before” Budget.

Samir Arora, founder and fund manager, Helios Capital, in an interview with Puneet Wadhwa, says that with strong economic revival, investors will have more choices to speculate, and medium-cap companies should also move, going ahead. Edited excerpts: How does one interpret the Budget proposals? Have the markets celebrated too soon? This has been an economy- and market-friendly Budget, because it reflects a change.
One of the foremost important yet under penetrated sectors in India, insurance, has been making headlines for the past few weeks. The spotlight which placed on the world in early February, when government minister Nirmala Sitharaman proposed to extend permissible foreign direct investment (FDI) limit in insurance companies to 74% from 49% and- permit foreign ownership and control with safeguards. The law currently says that an Indian non depository financial institution must be ‘Indian-owned and controlled’. The measure proposed within the Budget would give the Indian partner.

India is one among the most important suppliers to the planet and is probably going to own good quantities of vaccines available within the next two quarters. Case rates and fatalities are reducing in any case of India which helped most parts of the country ease or remove restrictions on movement. Economic activity is bouncing back better than what was feared some months ago, led by a robust rural demand base where India will grow 10% in FY22, as compared to a contraction of 8% in FY21. However, even after this growth, we'd have lost 1 year of growth -FY22 GDP is 8% below the pre-Covid. We don’t see much upside to the numbers above because the fiscal support in India has been only about 2%, compared with 6-10% within the western world.Top of Form

Globally, thanks to the huge fiscal and monetary measures, developed economies are bouncing back fast. The recovery rate for the services sector is slower (Because of restricted movements and social distancing), realty and manufacturing segments are growing well, and trade is accelerating. Global GDP gross domestic product (GDP) is anticipated to grow by 5% in 2021 against a contraction of 4% in 2020.