Foreign investors may be lured back to Indian equities after the government scrapped a tax on overseas funds while rolling out measures to boost economic growth.
Singapore-based Taurus Wealth Advisors Pte., for one, is adding exposure to Indian equities and funds on a tactical basis, according to Rainer Michael Preiss, a strategist at the company, citing government measures unveiled after local markets closed on Aug. 23. “After a rather disappointing few months, Indian equities could benefit from renewed government support and market friendly policies.”
Eastspring Investments Singapore Ltd., which added to Indian equities a few weeks back, is now looking to increase the size of its positions. “The policy makers are taking the slowdown and portfolio flows seriously, so expect more,” said Colin Graham, Chief Investment Officer of Multi Asset Solutions at Eastspring in Singapore.
The Sensex on Tuesday extended gains by as much as 0.5 per cent from Monday’s steepest advance in three months. Finance Minister Nirmala Sitharaman late Friday rolled back an additional levy on foreign funds and said the administration will immediately inject Rs 70,000 crore ($9.8 billion) of fresh capital into its struggling state banks. Lenders vowed to pass on policy-rate cuts to their customers and Sitharaman promised to unveil more steps over coming weeks, including for the property sector.
The Reserve Bank of India on Monday approved a record Rs 1.76 lakh crore payout to the federal government.
Indian stocks have lost about $300 billion in market value as foreigners dumped more than $3 billion worth of local shares since the July 5 budge.
Nomura Holdings Inc. on Monday upgraded India stocks to overweight from neutral in its Asia-excluding-Japan allocation, citing the government’s moves to boost the economy as well as recent declines in equities. The Sensex fell 8 per cent between the July 5 budget and last Friday’s close.
Still, global funds were net sellers of $104 million on Monday, according to provisional data, even as the Sensex index climbed. Foreign inflows may be limited as they navigate through escalating global trade tension.