FIIs turned net buyers in equities in July after 9 months; what’s next for investors?
July turned out to be the best month for the Indian equity market this year so far. The benchmark equity index BSE Sensex climbed over 8 per cent to 57,570 during the month. Positive global cues and inflows by foreign institutional investors (FIIs) aided market sentiment. So, will the ongoing momentum continue on Dalal Street and which sectors and stocks may outperform going ahead? To discuss the same, Business Today caught up with Nitasha Shankar of YES Securities, to understand what lies ahead for the market.
BT: With an inflow of around Rs 4,989 crore, FIIs turned net buyers in the equity market in July after nine months of outflows. What will drive FII inflows going ahead?
Nitasha Shankar: We believe that in the long term, FII flows will return to India given higher earnings yield, better earnings visibility and the long-term domestic growth story.
BT: How do you see the next few quarters for D-Street amid rising interest rates?
Nitasha Shankar: The times ahead are going to be challenging for the world. Especially, for the young folk who have largely experienced a falling or low-interest rate regime and low inflation rates. Money making had become easy with a lot of low-cost liquidity flushing around. Central banks, which were touted as ‘slaves to the market’ chose to keep the interest rates low enough, as long as inflation levels were in reach of their targets.
However, with the pandemic hitting the world, the vulnerability of the global supply chain come to the forefront and indicated how fragile the system seems to be. The geopolitical risks cropped up to complicate matters even more. However, with the CPI in the US and Europe rising to levels over 8 per cent, it has compelled their respective central banks to prioritise tackling the same. Whether it will take a year or two or five (or possibly longer) to bring inflation levels back to their targeted figures of 2 per cent is anyone’s guess. But it surely does mean that the cheap money era is behind us.
BT: Where do you see buying opportunities in this market?