In 2023, India emerged as a major recipient of global liquidity, attracting approximately US$15 billion from global mutual funds exclusively into Indian equities, as outlined in a report by Elara Capital.
The report highlighted the significant foreign inflows into the Indian market, positioning it alongside the United States and Japan as the primary beneficiaries, while Europe experienced outflows. The data indicated that the US, India, Japan, and Hong Kong secured the top spots as the largest recipients of global funds in 2023, with China, Brazil, and Mexico following suit.
Notably, until September 2023, mid-cap funds in India witnessed robust inflows, constituting nearly 40% of the total funds. However, over the subsequent three months, foreign mutual fund inflows shifted focus towards large-cap funds, according to the report.
The trend of substantial inflows into India-dedicated funds persisted into January 2024, with weekly inflows totaling US$ 270 million, building on the previous weeks’ figures of US$ 450 million and US$ 524 million.
The report highlighted that most of these inflows continued to target large-cap funds, with a significant portion originating from US-domiciled funds. In contrast, China experienced weakened foreign flows in 2023, leading to substantial redemptions in the second half of the year.
A considerable portion of this redirected liquidity found its way into the Indian market, contributing to a 21% increase in India’s Net Asset Value (NAV) in 2023, while China saw a decline of 16%, according to Mr. Sunil Jain of Elara Capital.
