Following the elections, the Indian stock market is anticipated to draw in foreign investors. Analysts project a total of $100 billion in inflows over the span of several years.
JPMorgan expects significant foreign investment in Indian stocks following the elections, pointing to India’s promising long-term growth prospects and the potential for Federal Reserve rate cuts. Despite recent market fluctuations, the bank indicates that foreign funds have not fully capitalized on Indian equities and may see election results as a chance to boost their holdings. They forecast inflows of $100 billion over several years, emphasizing a favorable cycle of liquidity and coverage that could maintain or enhance India’s stock valuations.
Following Goldman Sachs Group., JPMorgan also anticipates increased inflows, attributing the trend to the widespread expectation of Prime Minister Narendra Modi securing another term in office. A potential third term for Modi is viewed as promising for the continuation of market-friendly policies, increased infrastructure spending, and efforts to attract foreign direct investment.
Our estimation suggests that if all benchmarked investors, including those in emerging markets, Asia excluding Japan, global markets excluding the US, and worldwide markets, were to merely balance their underweight positions on India, it could result in $100 billion worth of inflows over the coming years.
Data from the National Securities Depository Ltd indicates that as of February’s end, global funds held Indian stocks valued more tha $760 billion.
According to Sunil Koul, Asia Pacific equity strategist at Goldman Sachs, global funds are eager to increase their exposure to India and are seeking more favorable entry opportunities. Koul anticipates a surge in foreign inflows in the latter part of the year, as the elections will have concluded and the overall liquidity environment will be conducive to emerging market flows, with central banks implementing easing measures and a declining dollar.
(With the inputs from JP Morgan & Goldman Sachs Report, Reuters, Bloomberg)
