Election Result Outcome 2024: The uncertainties around Investments by Foreign Portfolio Investors (FPI) in the Indian Equity markets have increased with an unexpected Lok Sabha Election 2024 outcome. The Ruling Bhartiya Janta Party is likely to get lower than expected seats. This has increased uncertainties around FPI in flows further.
FPI were net sellers worth ₹12,436.22 crore in the markets on Tuesday, suggested provisional data on the NSE, which led to more than 5% fall in the benchmark Nifty-50 index and Sensex.
The Investments by Foreign Portfolio Investors (FPI) that turned net sellers of equities in the month on April 2024 are likely to remain uncertain in the near terms, say analysts. The NSDL data shows that while Foreign Portfolio Investors sold ₹8671 crore worth of Equities in the month of April, the intensity of outflows by the Foreign Portfolio Investors had increased during the month of May. The Foreign Portfolio investors were net sellers of ₹25,586 crore worth of equities in the month of May '2024.
There remains uncertainty around interest rate cuts by the US Federal Reserve The initial expectations were that the US Federal Reserve will start cutting rates in March'2024 which has continued getting delayed. A stronger dollar and higher treasury yields with expectations of “higher for longer” have meant that investments in the emerging markets became unattractive for the Foreign Portfolio Investors.
Vaibhav Vidwani, Research Analyst, Bonanza Portfolio said that due to uncertainties around the election's outcome, domestic markets plunged today and its a possible that this caused some foreign investors to sell off
The benchmark Nifty 50 index and the Sensex ended 5-6% lower on Tuesday.
"Obviously, the way the ongoing election outcome is throwing a surprise will result in some introspection and re-focusing on Foreign Institutional Investors India equity allocation, said Rakesh Parekh, MD and Co-Head, Portfolio Management Services, JM Financial Ltd
However, whatever, the actual outcome of the elections; Parekh believes growth and investment would remain the focus of the nature of any government. In this context, the longer-term attraction of investing in India would remain high and as a result flows in the longer term would continue to be positive, said Parekh
Aditya Sood - Fund Manager, InCred Asset Management said “Global emerging market allocations depend on various factors like geopolitical stability in a country and leadership continuity”
However as per Sood, the stability of the currency, which is a function of the fiscal deficit, current account surplus/deficit, and inflation. Since the election results are behind us, the focus of investors would shift to the formation of the government, appointment of ministers, the glide path of fiscal prudence, and the upcoming budget, added Sood
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
