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Will India be the Next Hot FPI Destination?
Jul 26, 2019

The recent fall shows the impact of foreign investors (FPI) on the Indian share market.

FPIs have pulled out Rs 123 billion till date in July.

The reason for this are many.

From slowdown in the economy to the budget...

But, can the real reason be external?

In March this year, the Morgan Stanley Capital International (MSCI) announced it would increase the weightage of Chinese A shares (stocks trading in mainland China) by 4 times. These shares form around 10% of total Chinese shares in the index.

FPIs investing in passive funds follow the MSCI EM index for investments in emerging markets.

A comparison of India's weightage with China in the MSCI EM index provides us clues on the recent outflows from FPIs.

It also explains the announcement to reduce promoter shareholding in the budget.

Will we see a similar FPI inflow in to Indian stocks?

Looking at the recent inflow in to the Chinese stock markets, it seems very likely.

Data Source:

This Chart Of The Day was published in The 5 Minute WrapUp - A Flood of Cash Will Come into the Indian Market Soon

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