{"id":147343,"date":"2021-12-14T15:33:34","date_gmt":"2021-12-14T15:33:34","guid":{"rendered":"https:\/\/precoinnews.com\/?p=147343"},"modified":"2021-12-14T15:33:34","modified_gmt":"2021-12-14T15:33:34","slug":"india-is-becoming-less-and-less-attractive-for-fiis","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/","title":{"rendered":"‘India is becoming less and less attractive for FIIs’"},"content":{"rendered":"

‘In the overall global portfolio, India’s weighting has come down in the past seven months.’<\/strong><\/p>\n

After a world-beating rally, domestic markets are losing their allure to emerging market peers.<\/p>\n

Sunil Tirumalai<\/strong>, executive director-India equity strategist, UBS Securities, explains why foreign portfolio investors have turned cautious on India.<\/p>\n

In conversation with Samie Modak<\/strong>\/Business Standard<\/em>, Tirumalai says this year’s rally is primarily driven by domestic money and those flows could dry up.<\/p>\n

How has India managed to outperform most global peers this year?<\/strong><\/p>\n

One, COVID-19 impacted the unorganised or the informal economy, but the listed space has largely benefited.<\/p>\n

Two, in 2020-2021, despite the economy shrinking 7.5 per cent, the earnings growth for Nifty companies was probably the best in a decade.<\/p>\n

The recovery from lockdowns has been reasonably good without any big government stimulus.<\/p>\n

Three, the domestic supplies of vaccines helped and the execution programme was stellar.<\/p>\n

Why have all foreign brokerages suddenly turned negative on India?<\/strong><\/p>\n

We have been fairly cautious on the Indian market since June 2021.<\/p>\n

At a regional level, UBS has had an ‘underweight’ stance on India.<\/p>\n

We did reiterate that about three weeks ago, when our outlook for the next year came up.<\/p>\n

There are a few things now, which are beginning to go against India.<\/p>\n

One is, of course, commodity costs. India is an importer of most commodities and costs are beginning to hurt.<\/p>\n

All commodity-heavy EMs have done really well.<\/p>\n

Companies are talking about pain from commodity inflation and margin pressure.<\/p>\n

Gross margins are the lowest in at least five to six years.<\/p>\n

Only around 40-45 per cent companies are able to beat consensus expectations on operating profits.<\/p>\n

In the past six months, India has underperformed on earnings upgrades.<\/p>\n

On the other hand, the Indian market has outperformed other EMs.<\/p>\n

In our universe of 12 large EMs, India is probably the ninth or 10th in terms of how earnings are growing.<\/p>\n

Also, we are also heading into a kind of politically active period with elections around the corner.<\/p>\n

The repeal of farm laws has taken some sheen off a reformist image the Centre had built.<\/p>\n

While I mentioned vaccination as a success story, the footnote is not so great.<\/p>\n

We seem to be complacent about the second dose.<\/p>\n

How are foreign institutional investor flows shaping up?<\/strong><\/p>\n

The last major buying by FIIs happened in March.<\/p>\n

When India’s second wave started, FIIs stopped buying. It’s a relative game.<\/p>\n

If you see positive momentum in other countries, flows would ideally go there.<\/p>\n

In the last six months, India’s earnings have not gone anywhere.<\/p>\n

For an investor, who has the option to choose across markets, India is becoming less and less attractive.<\/p>\n

FII flows were soft in the June and September quarters.<\/p>\n

This is when there was a massive exodus of money from China.<\/p>\n

This was at a time when trillions of dollars were being taken out of China.<\/p>\n

In the overall global portfolio, India’s weighting has come down in the past seven months.<\/p>\n

But the markets have continued to do well.<\/p>\n

Our belief is that it is primarily driven by domestic money.<\/p>\n

For the first nine months of 2021, we’ve probably seen $28 billion of domestic household flows enter the market, either directly or through mutual funds.<\/p>\n

This scale of money is the fuel which is keeping the market up.<\/p>\n

As a consequence, India has become very unattractive from a valuation perspective.<\/p>\n

Will household savings continue to flow into the markets?<\/strong><\/p>\n

We have early signs of fatigue in household buying.<\/p>\n

Just normalisation of life and consumption patterns will lead to lower savings and hence, lower flows.<\/p>\n

The flows into equity MFs have been slowing down.<\/p>\n

Most activity is only in a few high networth individual accounts.<\/p>\n

All you need is a small minority of retail investors to change their mind.<\/p>\n

A vast majority of demat account holders are minuscule in the grand scheme of things.<\/p>\n

How do you see policy normalisation impacting the equity market?<\/strong><\/p>\n

The linkage with the US Federal Reserve action has become weaker and weaker over the years.<\/p>\n

If the Reserve Bank of India acts on draining out liquidity and 10-year bond yields start going up, that is when Indian equities could start correcting.<\/p>\n

The Indian bond markets are more expensive than other countries.<\/p>\n

It is basically liquidity in all forms that is keeping rates low and valuations high.<\/p>\n

If that starts reversing, it could be a problem.<\/p>\n

What is your view on technology initial public offerings?<\/strong><\/p>\n

IPOs in the tech space is a fresh new wave.<\/p>\n

In the US and China, investors have had good experience of investing in these businesses.<\/p>\n

In the long term, if your stock choice is right, you can get really good returns.<\/p>\n

There is a belief in India’s long-term growth potential.<\/p>\n

Some of these businesses have strong capabilities and are expected to do really well.<\/p>\n

Most people want to have a slice of that.<\/p>\n

What is your view on commodity, banking, and information technology stocks?<\/strong><\/p>\n

I would be positive on banks, negative on IT and commodities.<\/p>\n

Over the next six to nine months, UBS expects reduction or a fall in commodity prices.<\/p>\n

We have already seen the best of commodity rally play out.<\/p>\n

But then, there can be some sub-segments. We like the refining business, in particular.<\/p>\n

Private banks are one of my preferred spaces.<\/p>\n

They have underperformed since the market is worried about asset quality.<\/p>\n

One or two quarters later, there should be some comfort on that front and that’s when the catch-up should happen.<\/p>\n

All the positives in the top line are fully factored in.<\/p>\n

We’re already talking about double-digit growth for a few years on this scale.<\/p>\n

The cost pressures are also quite intense.<\/p>\n

Feature Presentation: Aslam Hunani\/Rediff.com<\/em><\/strong><\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

‘In the overall global portfolio, India’s weighting<\/p>\n","protected":false},"author":3,"featured_media":147342,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"\n'India is becoming less and less attractive for FIIs' - Pre Coin News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"'India is becoming less and less attractive for FIIs' - Pre Coin News\" \/>\n<meta property=\"og:description\" content=\"‘In the overall global portfolio, India’s weighting\" \/>\n<meta property=\"og:url\" content=\"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/\" \/>\n<meta property=\"og:site_name\" content=\"Pre Coin News\" \/>\n<meta property=\"article:published_time\" content=\"2021-12-14T15:33:34+00:00\" \/>\n<meta name=\"author\" content=\"mediabest\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/precoinnews.com\/wp-content\/uploads\/2021\/12\/India-is-becoming-less-and-less-attractive-for-FIIs.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"mediabest\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/\",\"url\":\"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/\",\"name\":\"'India is becoming less and less attractive for FIIs' - Pre Coin News\",\"isPartOf\":{\"@id\":\"https:\/\/precoinnews.com\/#website\"},\"datePublished\":\"2021-12-14T15:33:34+00:00\",\"dateModified\":\"2021-12-14T15:33:34+00:00\",\"author\":{\"@id\":\"https:\/\/precoinnews.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a\"},\"breadcrumb\":{\"@id\":\"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/precoinnews.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Business\",\"item\":\"https:\/\/precoinnews.com\/category\/business\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"‘India is becoming less and less attractive for FIIs’\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/precoinnews.com\/#website\",\"url\":\"https:\/\/precoinnews.com\/\",\"name\":\"Pre Coin News\",\"description\":\"precoinnews.com\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/precoinnews.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/precoinnews.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a\",\"name\":\"mediabest\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/precoinnews.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/f5f13cb3b94fc348d515c0951f6ca073?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/f5f13cb3b94fc348d515c0951f6ca073?s=96&d=mm&r=g\",\"caption\":\"mediabest\"}}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"'India is becoming less and less attractive for FIIs' - Pre Coin News","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/","og_locale":"en_US","og_type":"article","og_title":"'India is becoming less and less attractive for FIIs' - Pre Coin News","og_description":"‘In the overall global portfolio, India’s weighting","og_url":"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/","og_site_name":"Pre Coin News","article_published_time":"2021-12-14T15:33:34+00:00","author":"mediabest","twitter_card":"summary_large_image","twitter_image":"https:\/\/precoinnews.com\/wp-content\/uploads\/2021\/12\/India-is-becoming-less-and-less-attractive-for-FIIs.jpg","twitter_misc":{"Written by":"mediabest","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/","url":"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/","name":"'India is becoming less and less attractive for FIIs' - Pre Coin News","isPartOf":{"@id":"https:\/\/precoinnews.com\/#website"},"datePublished":"2021-12-14T15:33:34+00:00","dateModified":"2021-12-14T15:33:34+00:00","author":{"@id":"https:\/\/precoinnews.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a"},"breadcrumb":{"@id":"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/precoinnews.com\/business\/india-is-becoming-less-and-less-attractive-for-fiis\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/precoinnews.com\/"},{"@type":"ListItem","position":2,"name":"Business","item":"https:\/\/precoinnews.com\/category\/business\/"},{"@type":"ListItem","position":3,"name":"‘India is becoming less and less attractive for FIIs’"}]},{"@type":"WebSite","@id":"https:\/\/precoinnews.com\/#website","url":"https:\/\/precoinnews.com\/","name":"Pre Coin News","description":"precoinnews.com","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/precoinnews.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/precoinnews.com\/#\/schema\/person\/ad0e9920e03d3b41c7ad02a18375d76a","name":"mediabest","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/precoinnews.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/f5f13cb3b94fc348d515c0951f6ca073?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/f5f13cb3b94fc348d515c0951f6ca073?s=96&d=mm&r=g","caption":"mediabest"}}]}},"_links":{"self":[{"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/posts\/147343"}],"collection":[{"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/comments?post=147343"}],"version-history":[{"count":0,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/posts\/147343\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/media\/147342"}],"wp:attachment":[{"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/media?parent=147343"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/categories?post=147343"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/precoinnews.com\/wp-json\/wp\/v2\/tags?post=147343"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}