Why Foreign Funds are buying Indian Equities

We are witnessing a strong buying in Indian Equities for the past one week. Let us first see how Nifty & Sensex have performed in June.

Nifty 50 have moved up from 9800 levels to 10168 levels in a week

Nifty 50

Sensex has moved up from 32900 to 34400 levels

Sensex

Let us now see the activity of foreign institutional investors in this week

They have bought Equity worth 13,900 crore in the first week of june with net buying everyday

Where is the money flowing from

  • Zero Interest Rate from ECB and Additional Money Supply

The European Central Bank approved yet more stimulus on Thursday to prop up an economy .

ECB increased the size of emergency bond purchases by 600 billion euros ($674 billion) to 1.35 trillion euros and that the purchases would run until the end of June 2021, six month longer than originally planned.

ECB also kept its main interest rate unchanged at 0% and its deposit rate, now its de facto benchmark, at minus 0.5%.

  • Fed Cuts Rates to Near Zero and Relaunched Bond-Buying Program

The Federal Reserve slashed its benchmark interest rate to near zero and said it would buy $700 billion in Treasury and mortgage-backed securities.

Why the money is flowing to Indian Equity

Indian Economy is one of the biggest developing economies in the world with 130 crore consumers. With phased lifting of lockdown from June, the economy is expected to pick up and come back on growth trajectory.

India’s Rs 20 lakh crore Covid relief package one among the largest in the world. The mega Rs 20 lakh crore stimulus package to save the lockdown-battered economy, focuses on tax breaks for small businesses as well as incentives for domestic manufacturing. The combined package works out to roughly 10 per cent of the GDP,

The Package is likely to help Indian Economy to recover thus the cheap money from Europe & America has started to flow into Indian Equity Market

Disclaimer : These views are based on the data available in the market. The author has taken utmost care in presenting and interpreting the data . However We will not be responsible for any loss incurred.