Foreign Fund Flows Into India Stocks Poised for January Record
By Santanu Chakraborty - Jan 27, 2013
Indian stocks are luring the biggest inflows ever for January as foreign investors grow confident the government will rein in the budget deficit and boost the economy.
Overseas funds bought a net $3.01 billion of local shares this year through Jan. 23, data from the market regulator show, surpassing the earlier January record of $2.18 billion set last year. Inflows surged to $24.5 billion in 2012, the highest among 10 Asian markets tracked by Bloomberg, helping the benchmark BSE India Sensitive Index (SENSEX), or Sensex, to post its biggest annual jump in three years.
Stocks gained even as economic growth waned, inflation accelerated to the fastest pace among the so-called BRIC nations and the current-account deficit widened to a record. The government has taken steps to attract more inflows since September by relaxing rules on foreign investment, lowering taxes on overseas borrowing, cutting fuel subsidies and raising import taxes on gold. Finance Minister Palaniappan Chidambaram pledged on Jan. 22 to deepen the overhaul of economic policy by introducing a goods-and-services tax.
“As long as the government continues its reforms program, foreign money will keep coming,” Gary Dugan, chief investment officer for Asia and Middle East at Coutts & Co., Royal Bank of Scotland Group Plc’s wealth management unit, said in an interview in Mumbai on Jan. 22. “If you are a portfolio manager investing in emerging markets and you get more and more money every week, you can’t take a big bet against India.”
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