Mumbai, 26 December (IANS). Investment by foreign investors in Indian domestic stock markets is increasing again and the long-term outlook of the market is strong. This information has been given in a report released on Friday.
According to a report by Emkay Global Financial Services, due to weakness in the rupee, foreign portfolio investors (FPIs) may stay away from the domestic market and are expected to return only after the currency stabilizes, which is possible only after the next one-two months.
However, according to the report, this is a temporary fluctuation and the inflow of domestic investors will remain strong for the long term outlook.
Low interest rates and removal of tax benefits on debt mutual funds make fixed income unattractive for investors.
“Unless there is a deep and widespread market correction (which is unlikely in our view), we expect continued and stable investment in the stock market from domestic investors,” the report said.
In the last 12 months, Indian investors have increased the share of their savings in the market from 17 per cent to 30 per cent after nine years (March 2016 to September 2024). However, this change was affected by market fluctuations.
“We consider this to be a temporary problem and expect it to increase to 45 per cent over the next 10 years. This change will impact the stability of India’s markets as domestic investors now hold more stakes and they insulate the market from volatility caused by FPI selling,” the report said.
The study on investments by FPIs and domestic investors revealed that FPIs are mostly investing in large stocks, especially in the financial sector.
Additionally, the report also revealed that the share of gold in household savings has increased by 855 bps to 45.6 per cent in the last 12 months, mainly due to the monthly increase.
“We do not see any major impact, as the data do not suggest that there will be any major change in consumption as a result. There is no historical relationship between gold prices and stock market investment flows,” the report said.
–IANS
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