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Inflows into equity mutual funds hit a record $4.2 billion last month despite the poll-linked volatility that whipsawed markets in May | Photo: Bloomberg
By Alex Gabriel Simon
Indian stocks got over the election shock at the fastest speed in recent history, as domestic investors used the near-$400 billion selloff last week as an opportunity to buy the dip.
The benchmark NSE Nifty 50 Index sank almost 6 per cent on June 4 after Prime Minister Narendra Modi’s alliance won a surprisingly slim majority, only to recoup the loss in the next three sessions. That’s the fastest recovery from a drop of more than 5 per cent in the last decade.
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The flood of local money means any pullback has a short shelf life, and contrasts with bearish positioning by foreign investors who remain net sellers of more than $5 billion this quarter.
The ample liquidity has also led to a surge in the prices of small, often low-quality and unknown stocks, as non-institutional players remain confident about making high returns “irrespective of prices and valuations,” Kotak Institutional Equities analysts led by Sanjeev Prasad wrote in a note.
“Narratives have taken firm root, while numbers and valuations have withered,” Kotak analysts said.
First Published: Jun 12 2024 | 12:53 PM IST
