Indian investors see brighter side
₹18,893 crore in September after six straight months of inflows, showed NSDL data. Till now, in October, they remain sellers. The ‘higher interest rates for a longer period’ narrative amid the US Federal Reserve’s hawkish stance could accelerate outflows from emerging markets including India.
But comparatively robust participation from domestic institutional investors has been a saving grace for the latter. Going ahead, investors would do well to follow the upcoming share sales. Record equity supply may cap returns in the near term, said analysts from Jefferies India in a report on 6 October.
According to the brokerage, FY24 is headed towards a $35 billion plus equity supply—the highest ever, even without much fund raise by banks. “The rising US yields are already constraining foreign portfolio investor flows, which will be important in face of high equity supply," said Jefferies’ analysts. Against this backdrop, India’s valuation multiple is expensive.
The MSCI India index is trading at a one-year forward price-to-earnings of nearly 20 times, showed Bloomberg data. One might argue that India’s premium valuation to Asian peers is justified, given the stable macroeconomic position. But with potential jokers in the pack, rich valuations can be detrimental."Exciting news! Mint is now on WhatsApp Channels
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