Indian Stocks Back on Some Foreign Radars After Policy Moves

(Bloomberg) -- Foreign investors may be lured back to Indian equities after the government scrapped a tax on overseas funds while rolling out measures to boost economic growth.

Singapore-based Taurus Wealth Advisors Pte., for one, is adding exposure to Indian equities and funds on a tactical basis, according to Rainer Michael Preiss, a strategist at the company, citing government measures unveiled after local markets closed on Aug. 23. “After a rather disappointing few months, Indian equities could benefit from renewed government support and market friendly policies.”

Eastspring Investments Singapore Ltd., which added to Indian equities a few weeks back, is now looking to increase the size of its positions. “The policy makers are taking the slowdown and portfolio flows seriously, so expect more,” said Colin Graham, chief investment office of multi asset solutions at Eastspring in Singapore.

India’s benchmark stock index today extended gains by as much as 0.5% from Monday’s steepest advance in three months. Finance Minister Nirmala Sitharaman late Friday rolled back an additional levy on foreign funds and said the administration will immediately inject 700 billion rupees ($9.8 billion) of fresh capital into its struggling state banks. Lenders vowed to pass on policy-rate cuts to their customers and Sitharaman promised to unveil more steps over coming weeks, including for the property sector.

The Reserve Bank of India on Monday approved a record 1.76 trillion-rupee payout to the federal government, boosting New Delhi’s coffers at a time when it is under pressure to provide fiscal stimulus to the slowing economy. Indian stocks have lost about $300 billion in market value as foreigners dumped more than $3 billion worth of local shares since the July 5 budget, which released an additional tax on some foreign funds but lacked measures to boost the economy.

Nomura Holdings Inc. on Monday upgraded India stocks to overweight from neutral in its Asia-excluding-Japan allocation, citing the government’s moves to boost the economy as well as recent declines in equities. The S&P BSE Sensex Index fell 8% after India’s July 5 budget was unveiled and last Friday’s close.

Still, global funds were net sellers of $104 million on Monday, according to provisional data from India’s exchanges, even as the Sensex index climbed. Foreign inflows may be limited as they navigate through escalating trade tension between the U.S. and China that has roiled financial markets.

--With assistance from Nupur Acharya.

To contact the reporters on this story: Abhishek Vishnoi in Singapore at avishnoi4@bloomberg.net;Ishika Mookerjee in Singapore at imookerjee@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Margo Towie

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