The reason why Indian market goes up and up
Data shows impressive growth in net capital flows to India
Wondering why Indian stock markets are so resilient in the face of disappointments on the economic and company earnings fronts? Data from the Institute of International Finance shows impressive growth in net capital flows to India. In calendar year 2017 till date, India received $17.5 billion of inflows, more than 60% of the sum it did in 2016. This is despite a slowdown in net flows to emerging markets (EMs). The year-to-date flows of $29 billion (excluding China) are the slowest since 2014. Perhaps growth opportunities in India compare favourably with those in other EMs, notwithstanding the high valuations.
Following India closely is Brazil, reporting $11.1 billion of inflows. Interestingly, China is finding it hard to cope with outflows. A decision by Moody’s Investors Service to downgrade China’s sovereign rating because of high corporate sector indebtedness may worsen the scenario. A few others like Turkey and South Africa too have seen weak flows compared to previous years.