MUMBAI, February 5: A three-month pullout from Indian stockmarkets by overseas investors has ended, an analyst said Thursday.Devesh Kumar, at the foreign brokerage Hoare Govett Asia, said almost $400 million had been withdrawn since November. But he added, "It seems the pull-out has halted. Things seem to be stabilising."
He said he expected renewed interest in Indian shares as long as recent turmoil in Asian markets did not return and India's upcoming elections did not "throw up negative results." He added, "This month we will see some inflows, though they will be marginal, at less than $50 million."
Overseas investors, for the first time since economic reforms opened up the market in 1992, began pulling money out of India in November. The capital markets regulator, Securities and Exchange Board of India (SEBI), said $148 million was withdrawn in November, followed by $155 million in December and $81 million in January.
Domestic and Asian concerns also saw the Indian rupee fall 13 per cent againstthe dollar since September to a record low of 40.34 in December, before the central bank stepped in to initiate a limited recovery.
Kumar said overseas stock investor confidence in the Indian markets was "better" now than in the last three months after the currency had stabilised.
It is good news the pull-out has slowed down considerably, but the Iraq-US stand-Off, the Asian markets turbulence and the domestic elections are still matters of concern. "Confidence in the Asian markets has yet to recover substantially."
But he argued Indian stocks now offered "attractive prices" after several weeks of falls.
The 30-share Bombay Stock Exchange Sensitive index last week fell to a 12-month low of 3,224.36 points. India goes to the polls between February 16 and March 7 after its minority coalition government collapsed in November.
Analysts said overseas investors were expected to invest about $four billion in Indian stock markets in 1998, the same as in 1997. About 480 investors, mainly pension and mutualfunds from Europe and the United States, have invested close to $nine billion in Indian shares since 1992.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
