With $1.13 Billion Equity Inflows, Indian Market Surpasses Global Peers In April: Report

In April, foreign institutional investors bought around $1.13 billion in local equities. This was the second consecutive month when the FIIs turned buyers

The Indian equity market emerged as the top performer among major global equity markets in April with an influx of $1.13 billion in equity flows. The two key equity benchmarks, Sensex and Nifty, outperformed global peers amid concerns over rising interest rates. 

According to a MoneyControl report, in April, foreign institutional investors (FII) bought around $1.13 billion in local equities. This was the second consecutive month when the FIIs turned buyers. FII net selling was reduced to $1.83 billion from $4.3 billion seen at the end of February 2023. 

The report attributes this to a consistent stream of positive macroeconomic indicators and a decrease in valuations. 

According to the report, in April, the Sensex and Nifty gained 3.6 per cent and 4.06 per cent, respectively. In comparison, other major global markets saw varied performances. The S&P 500 rose by 1.46 per cent, the Nasdaq Composite by 0.04 per cent, the CAC by 2.31 per cent, the DAX by 1.88 per cent, the Kospi by 1 per cent, the Nikkei 225 by 3 per cent, the Shanghai Composite by 1.5 per cent, the FTSE 100 by 3.13 per cent, the Dow Jones and Ibovespa by 2.5 per cent each. On the other hand, Taiwan and Hang Seng experienced declines of 1.8 per cent and 2.5 per cent, respectively.

The report also cited Bloomberg data saying that in April China attracted the most foreign investment in equities this year, receiving a total of $48.19 billion. Japan and Indonesia are in second and third place, respectively, with $13.96 billion and $11.27 billion in foreign investment. However, Foreign Institutional Investors (FIIs) have been net sellers in the United States, selling around $40.74 billion worth of equities. In Thailand, they sold $1.88 billion, while in the Philippines and Malaysia, FIIs sold approximately $500 million worth of equities each.

Improving Macroeconomic Indicators 

Investor sentiment in India has been boosted by improving macroeconomic conditions, which include a decline in consumer price inflation and the Reserve Bank of India halting interest rate hikes. While the services sector expanded in March, its Purchasing Managers' Index (PMI) dropped to 57.8 from February's 12-year high of 59.4, according to S&P Global data released on April 5. In April, the government collected a record-breaking Rs 1.87 lakh crore in Goods and Services Tax (GST), surpassing the previous record high of Rs 1.68 lakh crore collected a year ago.

According to Gaurav Dua, Senior VP - Head of Capital Market Strategy at Sharekhan by BNP Paribas, the opening of China's equity markets during the first quarter of the year prompted a shift in foreign outflows, as investors sought relatively cheaper opportunities there. However, by the end of March 2023, the surge in China's markets and a correction in Indian markets had narrowed the valuation gap, easing selling pressure.

Dua also noted that the US banking crisis led the Federal Reserve to reopen liquidity taps, triggering a positive risk-off trade globally, which benefited emerging markets.