After sales of over Rs 12,000-crore in a day, FPIs could wait & watch
Foreign investors are expected to defer investments in Indian equities until clarity emerges on the new government and its policies, with the political mosaic drastically altered after a narrower-than-expected NDA poll victory that has left the BJP reliant on allies for a simple majority. Overseas investors have sold Indian stocks worth ₹34,257 crore in the last two months and sold over ₹25,000 crore in May, alone.
«No major immediate moves are expected, especially with the consumption story emerging post the mandate which was significantly different from the predictions of the exit polls and even what markets wanted,» said Abhilash Pagaria, head of alternative & quantitative research at Nuvama.
Pagaria said that foreign inflows are likely to come in only if the markets correct a bit as it continue to be at a premium.
«FIIs are likely to put their incremental India investments on hold until greater clarity emerges on government formation as there is some nervousness around the nature of the coalition among other things,» said Pratik Gupta, CEO, Kotak Institutional Equities.
Analysts said while the previous government's thrust remained on fiscal consolidation and infrastructure, the pressure to accommodate coalition partners' demands would come into play now and the pace of decision making may also be impacted.
«As far as economic policies are concerned, there is no dramatic change expected,» said U R Bhat, director, Alphaniti. «While the seats are lesser than expected for the BJP, policy continuation is likely,
