Modi meets Elon Musk and Ray Dalio as global money flows to India:
Indian Prime Minister Narendra Modi's trip to the United States could not
have come at a better time. A booming economy, stock indexes at record highs,
and a rapidly growing consumer market are attracting great publicity as they
showcase the country's potential to American business leaders and investors.
Equities in India have attracted nearly $10 billion in net inflows from
overseas since March, which will be the highest in any quarter since the end of
2020. Rupee-denominated bonds are expected to see the longest streak of monthly
purchases by foreign funds in almost a week Four years The local currency
offers the second-best carry yields in Asia this year, according to Bank of
America.
Modi's visit promises more: Tesla Inc. is likely to make a significant investment in India, CEO Elon Musk said after meeting with the South Asian country's leader, who also urged Bridgewater Associates founder Ray Dalio to close the investment in the country strengthen. General Electric Co. and Hindustan Aeronautics are expected to sign a deal to produce engines for Indian fighter jets during Modi's trip.
"Investors agree that India is going through a 'golden loop'
period," Samiran Chakraborty and Baqar Zaidi, economists at Citigroup
Inc., wrote in a note this week after a meeting with equity and securities
investors in fixed income in London.
The influx of foreign funds and the pandemic-driven retail investment boom
have propelled India's benchmark NSE Nifty 50 index to all-time highs, with the
index rising nearly 9% this quarter.
Citi economists write that despite high valuations, investors are willing
to hold on to their “long” positions in India. "There was no discernible
fear of an immediate reversal in these portfolio flows."
Strategists at UBS Global Wealth Management and Société Générale have
revised their views on India this week.
However, risks loom on the horizon. Late arrival of the monsoon rains,
which are key to inflation and growth, could jeopardize the recovery of Indian
consumption. Additionally, a strong rebound in China – where equity valuations
have become too low for some fund managers to ignore – could hurt Indian stocks
as they are touted as one of the main beneficiaries of the exit from China.
There are also early signs of a slowdown in foreign direct investment in
India. Those inflows fell 22% to $46 billion in the year ending March. The
drop, led by manufacturing, came despite the government's program to provide
financial incentives for manufacturing goods in India.
