ETMarkets Smart Talk: FIIs holding in India stocks is at decadal low after 2 years of outflow: Ajay Vora

economictimes.indiatimes.com:

“FIIs have pumped USD 11 bn in the last 4 months in India, after selling nearly USD 60 bn in the last 2 years. FIIs holding in India stocks is at a decadal low after the last 2 years of outflow,” says Ajay Vora, Head- Equities, Nuvama Asset Management. In an interview with ETMarkets, Vora said: “We expect FIIs to come back to India in a strong way as earnings growth remains much better than other emerging markets and India can continue to command premium valuations” Edited excerpts:We hit fresh record highs earlier in June. What is your outlook on markets? India is relatively well placed versus all large economies as our nominal GDP growth is still around 11-12% which is much better than other markets.

After the recent 12% rally from the March 2023 lows, we can see some retracement/consolidation but the uptrend remains intact given the strong earnings growth trajectory.Interesting trend in MFs! We have seen SIP money inching towards Rs 15000 cr in May – it does reflect the maturity of retail investors. But will the trend continue? In the last 2 years, we have seen DIIs pumping in USD 25 bn p.a. mainly due to sharp rise in SIP book.

But if we look at the overall allocation by retail to Equities, it is only 3.5% of their annual savings. Indian Household savings in a year is USD 700 bn but only 3% is being channelized to equity markets. If we compare this with other developed markets where the number is in double digits, we are way behind in terms of equity penetration.