India Shining most in Emerging Markets

For the past few weeks, FIIs have been net buyers in Indian equities almost daily with DIIs being net sellers. This liquidity gush in palpable, but how much is it really? Let’s talk numbers...

Between March and April 2020, FIIs withdrew USD 9.2 billion worth of equity investments from India, which was recouped by Aug itself, when cumulative equity investment during May-Aug aggregated USD 12.1 bn. By Aug, Nifty also returned to its 28th Feb20 level of 11,200. While foreign flows took a breather in Sept & Oct, in Nov, FIIs again bought USD 8.1 bn worth of Indian equities, which is as much as the March month sale. First 18 days of Dec 2020 have already recorded USD 5.7 bn of FII buying in India equities. Thus, this liquidity gush is bound to drive markets in the short term.

But while India has witnessed USD 20 bn FII fund inflow YTD, other emerging markets like Indonesia, Brazil, South Africa, Malaysia, Thailand, Phillipines still have a net outflow figure YTD. Thus, India scores over most other EMs in attracting the stimulus money. It’s handling of the pandemic despite such a large population base and reform-led growth is something which even the FIIs can’t afford to ignore.