Big ramp-up after election but FII flows have started coming in: Pramod Gubbi

economictimes.indiatimes.com:

Pramod Gubbi, Founder, Marcellus Investment Managers, says “I expect significant flows to come into India largely through India-dedicated funds. Maybe on the other side of elections perhaps because that is the only bit of uncertainty, maybe the last week's state elections has ironed out that uncertainty a little bit. Allocators would like to see some political stability. So, maybe the big ramp up might come on the other side of the election, but we have already seen the beginnings of those starting with last week's flows. ”


We are trying to map the factors which are at play; the sudden change of stance from the Fed last evening has triggered a big global risk-on moment. India is also participating. Is it really something which the market is surprised about or was it largely in the direction the market was expecting? Three rate cut possibilities are now on the table starting mid-next year.
I reckon it is not a total surprise. Pretty much at the beginning of April of this year, the best indication has been either the dollar index or FII flows into India as well. We have bottomed out in terms of FII outflows sometime in March 2023. And I think it was the 25th March 2023 Fed meeting which triggered that. In sum, the market started factoring in that we are close to the peak of the interest rate cycle, if not foreseeing some cuts. That has been at play for quite some time.

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In fact, over the last month or so, November, we saw massive FII inflows. Throughout that period, it is