Optimistic of the country’s long-term growth prospects, India-focussed offshore funds and exchange-traded funds (ETFs) have pumped in nearly USD 6 billion in the first nine months of the year. In contrast, these funds had pulled out USD 1.73 billion in January-September of 2016, according to a Morningstar report. The offshore India fund — not domiciled in India — receives flow from overseas investors and in turn, invests the money in Indian markets. India-focussed offshore funds and ETFs are a subset of the overall foreign portfolio investor (FPI) flows. According to the report, India-focused offshore funds invested USD 4.96 billion during January-September of the year while those of ETFs witnessed an infusion of USD 747 million, taking the total to USD 5.7 billion. On a positive note, the money largely came into offshore funds which signify long-term money as against offshore ETF, where the money is largely short-term.
“I still feel that the long-term story is intact and solid and we will continue to get long-term money through the fund route,” said Himanshu Srivastava, Senior Analyst Manager Research at Morningstar India. During the July-September quarter, offshore funds and ETFs together witnessed an inflow of USD 935 million, which was lower than USD 2.77 billion seen in the preceding three months.
“One of the major reasons which is working against emerging markets is the increased tension on the Korean peninsula due to the stand-off between the US and North Korea,” Srivastava said. Besides, India is more impacted largely due to the delay in the pick-up of economic growth. This, coupled with expensive valuations, makes it a tricky situation, he added.