Foreign investors are accelerating their purchases of Indian equities on hopes of continued recovery ahead of the upcoming earnings season, while also benefiting from lower valuations following a recent selloff.
Global funds purchased $2.6 billion of Indian shares on a net basis in the week through March 27, their biggest inflow since early December, according to data compiled by Bloomberg. They have been purchasing local shares for two straight weeks now.
The benchmark NSE Nifty 50 Index is still about 10% off its previous peak levels seen in September, though it advanced in March for its first gain in the past six months. After taking out almost $26 billion from the start of October, foreign investors have been buying shares, betting on signs of an economic rebound.
“We see a bottoming of economic momentum in sight” in India given constructive domestic factors and lower vulnerability to external trade tensions, Alexander Wolf, the head of Asia Investment Strategy at J.P. Morgan Private Bank, wrote in a note. “This could, in turn, lead to a recovery in the equity market.”
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