Never before were non-resident Indians (NRIs) so bullish on the Indian equity market, it appears, with their turnover touching an all-time high in FY13.
As per BSE data, NRIs net bought R129.11 crore of Indian equities during the previous fiscal, the highest since the stock exchange began maintaining the data. NRIs had net bought R77 crore and R75 crore of Indian equities in FY12 and FY11, respectively. In FY10, NRIs had remained net sellers at R27 crore.
Experts managing NRI portfolios said that the 6% market fall since the multi-year highs of January prompted clients to indulge in value buying. NRI clients bought good quality blue chips and high-beta stocks to build portfolios. In addition, they aggressively invested in defensives such as healthcare.
?NRIs are the most sensible investors in Indian equities. They do delivery-based transactions and have the power to hold their investments for the long term. When the market corrected last month, NRIs picked stocks, which were attractively valued,? said CJ George, managing director, Geojit BNP Paribas Financial Services, which has a large network in West Asia.
In March 2013, NRIs net bought Indian equities worth R142.80 crore, the highest ever on record, according to the BSE, which has been maintaining data on NRI inflows since 2005.
Interestingly, the turnover of NRI clients had fallen to multi-year lows in September last year as risks of sovereign downgrade by rating agencies forced investors to dump Indian equities. Data show that NRI were net sellers for five straight months (August to December).
While the amount invested by NRIs is far lower than the average daily turnover in the cash market, experts say the sentiment has improved over the last few months as valuations continue to be attractive. Experts believe that NRIs will continue to invest in Indian equities. However, their focus will remain on frontline stocks and companies adhering to the highest form of governance. In addition, reforming of Indian economy will also drive NRI investments in Indian equities, they say.
?The Indian growth story may have become dormant but the story is not over yet. There are plenty of reforms and announcements in the pipeline.? said Vikram Dhawan, director ? wealth management, Equentis Capital ? a UK-based broking, wealth management, advisory and analytics firm promoted by persons of Indian origin.
Dhawan said very few investment opportunities exist in developed markets. Markets like the US and Japan have touched new peaks, but have also seen their valuations getting stretched. Moreover, India?s average long-term returns compared with that of developed markets also make Indian markets one of the most preferred by NRI clients, he said.
Sensex has given average returns of 26.9% on a year-on-year basis during the last 10 years vis-?-vis average returns of 7.6% by MSCI Word Index, Bloomberg data show.