Bombay:Even though foreign funds are worried about the domestic market due to the surge in valuations amid the massive market rally, their stake in domestic stocks reached $ 630 billion in August, according to a U.S. brokerage report. In June of this year, the value of the investments of the IFIs was only $ 592 billion, meaning that as the market rallied frantically, the value of their holding jumped by $ 38 billion, even as their investment net incremental was almost zero between this period.
The market rallied the most in August, hitting many new records, mainly thanks to retail investors and domestic funds, whose investments are currently at an all-time high. The market hit new highs with the Sensex on Thursday sniffing at 60,000 frames and the Nifty at around 17,850.
Foreign investment, which reached a record high of over $ 37 billion in FY21, has reached $ 7.2 billion so far this fiscal year, the second highest of any emerging market after Brazil’s $ 9 billion. Foreign portfolio investors (REITs) turned positive again in August with a margin of $ 281 million in net inflows compared to $ 1.5 billion in outflows in July, according to Bank of America India Securities.
With $ 7.2 billion in year-to-date inflows in domestic stocks, it is the second highest among all emerging markets (EMs) as FII flows, as most EMs have continued to see exits in August, with South Korea losing $ 26.4 billion. and Taiwan $ 16.2 billion, according to the report.
“The value of the global exposure to equities of FIIs (foreign institutional investments) stood at $ 630 billion at the end of August after their net investment turned positive to a mustache of $ 281 million after the massive sale of July to the tune of $ 1.5 billion, “BofA said in a report without giving a comparative figure or percentage increase.
However, a June report from BofA put the value at $ 592 billion, down slightly from $ 596 billion the previous May. The overall erosion in value of about $ 4 billion between May and June is more due to the loss of valuation of many stocks.
An IIFR Research report in July said the valuation of $ 592 billion was against FII’s net investment of just $ 206 billion in domestic stocks since fiscal 2000.
Of the $ 630 billion in assets under management, FII’s main holdings are in finance and information technology at 34.9% each, energy at 13.5%, utilities ( 2.7%), industry (5.5%) and discretionary goods (9 percent).
From a sector perspective, FIIs remain overweight energy (5.9%), financials (4.5%) and discretionary (1.2%), and are underweight materials (-9.9%), industrial products (-1.7% cent) and health care (-0.6%).
Meanwhile, domestic funds injected a solid $ 3.9 billion after a record $ 5.6 billion in July, the highest in two years.
Meanwhile, the Wall Street brokerage has reiterated its warning of caution and a deep market correction given the massive rally. “With valuations peaking, we expect a tactical market correction and our Nifty target is 15,000, which implies a total potential drop of 9%.”
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