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FIIs remain bullish on Indian market; trend likely to sustain, say experts

While MSCI weight remains a factor, strong September quarter earnings, improving macroeconomic factors and weakness of dollar index are also signalling FII inflow into the Indian market may sustain.

Foreign institutional investors (FIIs) have been on a buying spree in the Indian market and the trend may continue for days to come, say experts.

In the cash segment, FIIs pumped in Rs 14,537.40 crore into the Indian market in October, data available with Moneycontrol showed.

The bullish trend continued in the current month too as FIIs have pumped in Rs 13,399.41 crore into the Indian market in the month of November so far.


"By the end of this month, India's weight in MSCI will go up. That is supposed to cause an inflow of about $3 billion. This month will be good as far as inflows of FII is concerned," Samir Arora, Founder & Fund Manager, HeliosCapital told CNBC-TV18.

Morgan Stanley Capital Investment (MSCI), a leading provider of research-based indexes and analytics, will tweak the foreign ownership limits for India stocks in its global indexes from December 1, a move that could see passive inflows of $2.5 billion into the country.

"We will implement changes in foreign ownership limits in the MSCI Global Indexes containing Indian securities coinciding with the November 2020 Semi-Annual Index Review (SAIR) at the close of November 30, effective December 1, 2020," MSCI said in its statement.

While MSCI weight remains a factor, strong September quarter earnings, improving macroeconomic factors and weakness of dollar index are also signalling FII inflow into the Indian market may sustain.

"Management commentary has been very positive across sectors which is positive. Besides, improving macro is also expected to keep the market attractive," said Pankaj Pandey, Head of Research, ICICI Securities.

Another factor is that market expects more correction in the dollar index if Joe Biden becomes the President of the US.

"There is a general view that if Biden becomes the president, there will be more correction in the dollar index which will help flows coming into the emerging markets," said Rusmik Oza, Senior VP (Head of Fundamental Research) at Kotak Securities.

Now, the US Fed will be in focus. Bond yields, dollar and rates may remain lower which will help emerging markets," Oza added.

On the front of COVID-19 cases, India has done better in comparison to most countries as the mortality rate in the country remained low and the recovery rates were high.

"India did see cases rising but the good part is that it seems some bit of herd immunity is building in here as we have been exposed to the virus. In this case, India could stand out," said Oza.

Oza also pointed out India's economy is showing signs of improvement despite lesser stimulus. However, the body language of the government has been ensuring that it will take measures to keep the economy up and running.

This also seems to have given confidence to foreign investors.

A lot of factors, including better-than-expected quarterly numbers, Fed's softer stance and improving economy, appear to be playing in favour of Indian markets. Analysts are of the view that the Indian market is in a sweet spot.

Source- Moneycontrol.com

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