Indian stocks are outperforming their BRIC peers by the most ever as investment from abroad defies outflows from other major emerging markets.
The CHART OF THE DAY shows the ratio of the S&P BSE Sensex Index versus the MSCI BRIC Index reached the highest since Bloomberg started tracking the data in December 1994. The Sensex rose 0.1 percent this year through June 10, compared with losses of between 11 percent and 16 percent for the Hang Seng China Enterprises Index, Russia’s Micex Index and Brazil’s Ibovespa. The bottom panel shows India’s net foreign equity inflows of $15.3 billion are the highest ever for the year-to-June 7 period.
Overseas investors pumped $221 million into Indian shares last week, according to data compiled by Bloomberg. That compares with outflows of $5 billion from emerging equities in the five days to June 5, the most since August 2011, Morgan Stanley said, citing EPFR Global. Investors pulled some $1.5 billion from Chinese equities, $530 million from Brazil and $360 million from Russia during the period, Morgan Stanley said.
“I’d attribute this more to the poor performance of Brazil, China and Russia rather than good performance of India,” said Peter Elston, head of Asia Pacific strategy at Aberdeen Asset Management in Singapore. “China has been struggling with containing a credit-fuelled investment binge, Russia with a weak oil price, and Brazil with inflation. It should be noted that in the case of India, inflation has been falling.”
Overseas investors continued to plow funds into Indian stocks last week even as a plunge in the rupee to a record low triggered concern that energy prices may rise in a nation that imports about 80 percent of its oil. Foreign funds sold more than $1 billion of the nation’s corporate and sovereign bonds in the same period, the most ever.
Indian wholesale prices increased 4.89 percent in April from a year earlier, a 41-month low. The Reserve Bank of India will review monetary policy on June 17 after cutting the repurchase rate by 75 basis points this year to 7.25 percent. Governor Duvvuri Subbarao indicated after the most recent cut on May 3 that the nation has almost no space to ease further.
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