Elara Securities India - Global Liquidity Tracker: Inflows into India Dedicated Largecap funds continued ahead of Election results. China flows again turn weak
Foreign flows into India Large cap funds continued despite election results uncertainty. Another inflow of $587mn this week, broadly in line with weekly average inflow of $500mn over the past 1-year. Most of this money is flowing into the top 100-120 large cap names. Their inflow into Mid and Smallcap funds has already stopped since Nov'23.
Ahead of 2019 elections, we were witnessing massive redemptions from India dedicated funds, pre and post-election results as global funds were committing incremental capital to Chinese markets. Hence despite Modi victory, markets continued to trade weak on flight of foreign capital. During the 2014 elections, foreign flows into India dedicated funds started a few months after election results from Jun'14 onwards & continued into 2015. The momentum started reversing post 2015 budget.
Global inflows slowed down this week to $1.8bn from $10.5bn in the previous week. Biggest drop was in US flows from $12bn to $4.4bn. Last week, China had seen a 10-month large inflow of $870mn by foreigners. However, all of that reversed this week with redemptions of $1bn. Foreign flows into China is still not showing any signs of consistent revival.
As of now, our Global Asset Class Risk Flow Indicator continues to scale higher as relative revival in demand for risky assets continues (mostly High Yield Bonds). We are closely watching for revival in flows into Global Commodity dedicated funds (funds investing in Global commodity stocks). Although trends have been bottoming here, we have not seen a strong revival of inflows here. Once that begins, we could see strong rally emerging in Global commodity stocks.
SEBI FII Data- Pre/Post Elections of 2009/2014/2019/2024
FII flows just started reviving after GFC crises hence the momentum was strong for next 10-months post-election results.
FII flows were weak ahead of 2014 election results as markets were going through Financial and currency crises. Hence post results, flows continued to remain strong.
FII flows were already weak since 2018 on back of Global weakness and incremental money moving to China. Hence FII flows showed one recovery ahead of election results but quickly lost momentum post results.
In the current phase, FII flows have been showing strong cycle of volatility since end-2023 since markets are running very heavy on Retail participation.
Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.
