Reports suggested that emerging market funds deployed a sizable amount of funds into Indian equity markets in 2012.
These funds, that are a section of foreign institutional investors (FIIs), invest in markets such as India, China, South Korea and Taiwan, among others.
On the other hand, India-focused funds witnessed sharp redemptions from their abroad clients during the year, quashing the popular perception that foreign investors are queuing to pour money specifically into the countryÂ’s stocks.
This suggests foreign investors were more comfortable putting money into the nationÂ’s stocks through emerging market funds rather than India-centric ones, say analysts.
India has been a part-beneficiary of investorsÂ’ interest in emerging markets. The flows are not because of any major India-specific interest, says Dhruva Raj Chatterji, senior research analyst, Morningstar, a fund tracker.
Clients have pulled $1.7 billion out of India-focused offshore funds so far in 2012, while India-centric exchange-traded funds (ETFs) have seen inflows of just about $468 million in the period, according to Morningstar.
While the quantum of money that has flown into India through emerging market funds is not known, Morningstar data show US-based emerging market funds & ETFs have seen an inflow of $37 billion in 2012 (up to October).
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