According to the data, overseas investors bought a total of $985.5 million worth of Indian stocks last Friday and this week.
As there are signs that Indian Prime Minister Modi will continue reforms under the new coalition government, foreign investors have begun to reduce their shareholding positions in the Indian stock market.
According to data, foreign investors purchased a total of $985.5 million worth of Indian stocks last Friday and this week. This helped the Indian stock index recover from the election-related decline and hit a historic high earlier this week. Their return suggests that they may be satisfied with the valuation of India's nearly $5 trillion stock market.
"Modi will not waste the structural progress made over the past eight years and can also withstand a good phase of populism," wrote Gary Dugan, Chief Investment Officer of Global CIO Office in a report. "We expect that despite overvalued valuations, the Indian stock market will remain resilient."
After the Indian People's Party led by Modi won fewer seats than expected in the election, the Indian stock market suffered its worst day in over four years. But with Modi forming a government with coalition parties, enabling him to continue his third term, the Indian stock market rebounded.
According to a report cited by Bank of America, approximately $1.2 billion flowed into the Indian stock market through ETFs and mutual funds in the week ending on June 5th. ETFs listed in the US, such as iShares MSCI India ETF and WisdomTree India Earnings Fund, are also attracting funds.
More importantly, Modi was able to keep his closest advisers in key leadership positions, including finance, business, and foreign affairs. This indicates that the People's Party still firmly controls the new coalition government, which has encouraged investors attracted to India's prospects for policy continuity, fiscal reform, and infrastructure spending in various areas under Modi's leadership.
However, the trend of foreign capital outflows has not completely reversed. In Tuesday's trading, foreign investors temporarily sold $13.3 million worth of stocks, and they still net sold over $5 billion worth of stocks this quarter, the largest quarterly withdrawal in two years.