No Angst Seen Among Indian Investors as Local Flows Accelerate

(Bloomberg) -- The gush of money into Indian stock funds as investors chase returns amid falling demand for gold, real estate and debt isn’t abating.

Investors pumped 189 billion rupees ($2.9 billion) into the funds in September, after pouring a record 203 billion rupees in August, data from the Association of Mutual Funds in India show. The 804 billion rupees of net inflows in the first six months of the year that began April 1 is more than triple compared with the year-earlier period.

The flood of cash has provided a buffer against outflows sparked by the risk-off sentiment that’s caused global investors to sour on Asian markets. Funds bought 175 billion rupees of shares in September, despite a bout of market weakness, while their overseas peers remained net sellers as data showed slowing growth in Asia’s third-largest economy.

The shift toward financial assets will gather pace, according to Morgan Stanley. India’s total financial savings are currently at 9 percent of gross domestic product, compared with a peak of 15 percent eight years ago, and the government’s push for pension funds to invest in stocks will drive flows higher, Ridham Desai, managing director at the firm’s India unit, said last month.