Yields in most markets have been rising amid rising commodity and crude costs stoking inflation pressures prompting buyers pull-out from rising markets. But India continues to be an exception. India acquired portfolio flows value $6 billion for the reason that starting of the calendar, and ETIG compilation of Bloomberg knowledge confirmed.
In distinction South Korea witnessed outflows value $6 billion, adopted by Taiwan with $3 billion shifting out. Among different Asian friends, Philippines, Thailand and Malaysia additionally witnessed outflows from their markets through the interval. Indonesia has been an outlier amongst them with inflows value lower than $1 billion through the interval.
For a perspective, the FII sell-off in March 2020, within the preliminary part of the lockdown, was extra sentimental than basic. “As of as we speak, what India gives to FIIs i.e. progress (for fairness) and carry (for bonds), even on a threat adjusted foundation, is engaging,” mentioned Joydeep Sen, guide at Philip Capital. GDP progress within the coming 12 months is predicted to be the most effective on this planet, although on a decrease base. There is not any palpable apprehension of sovereign credit standing downgrade.”
In bonds, there could also be some mark-to-market hit, however it’s contained by advantage of RBI help, sellers mentioned. As the overseas markets are going by way of “non-taper tantrum”, India is billed as one of many higher locations. GDP pattern progress is predicted to be 6% past FY22, top-of-the-line amongst main economies. “Off-Balance-Sheet or Extra Budgetary-Resources are being regularised (coming clean) and fiscal deficit will be progressively reduced,” mentioned a bond seller from an American financial institution.
One distinct characteristic is the macro scene and the submit COVID revival path the place India stands aside from her different Asian counterparts. “In parts of ASEAN, a flare-up in COVID-19 infections has taken its toll. In Malaysia, for example, another lockdown has now been extended to early March, affecting large parts of the economy. Meanwhile, in Indonesia, Vietnam, and Thailand, tighter restrictions in early 2021 have weighed on activity” mentioned a report by HSBC. “India, by contrast, is delivering a remarkably strong recovery. By some measures, industrial activity is only a few percentage points below its pre-pandemic peak. Mobility, too, has largely recovered, which should help spur services demand (which is still 25% below pre-pandemic level) in the coming months”