Mumbai: The Indian equity markets, which had shown far greater resilience to global shocks during the past two weeks is likely to be a beneficiary of the current equity market meltdown in China. “It’s going to be relatively good for India. Earlier global fund managers were overweight on India and underweight on China and there were fears about fund reallocation in favour of China. That fear has now subsided,” said Navneet Munot, chief investment officer, SBI MF.
According to him, a major positive for the Indian markets at the moment is the emergence of domestic investors as a strong counterbalance to foreign institutional investors. Data provided by stock exchanges and Securities and Exchange Board of India (Sebi) showed that Domestic institutional investor’s had invested more than double the amount sold by FPI’s during the month of May and June this year.
Domestic institutional investors, which include insurance firms and mutual funds, have together invested close to Rs 20,000 crore during this period as compared to around Rs 9,500 crore worth of selling by foreign portfolio investors.“The emergence of domestic investors have helped contain volatility in the domestic bourses when the global equities remained highly volatile on account of the crisis in Greece and China. The mutual find industry has witnessed an inflow of around Rs90,000 crore during the past one year, which is just the beginning of a long term structural shift in the domestic equity markets,” noted Mr Munot.
While the earnings growth during the June quarter is expected to remain flat on a year on year (YoY) basis, State Bank of India Mutual Fund is expecting a real recovery in corporate performance during the October-December period. The fund house is very positive on industrial, auto ancillary, capital goods, engineering and construction while it has a cautious outlook on the metal sector.
