US fed hike

US fed is going to hike rates in Dec or in near future by around 25 bps and so FIIs will exit indian equities...r dey invested indian market for just 25bps...? hard to understand...???

 

Foreign Investors invest in India because they can earn good money. If they get a good opportunity to earn more money else where they will surely exit. Any sensible investor will do so. Our markets are lot dependent on foreign invesors. Hence, when foreign investors exit our markets go down. This situation will improve if more and more indian investors invest in indian share markets. NSE is trying to educate people and encourage them to invest in indian share markets directly or through mutual funds. Mutual funds are also trying to encourage people to invest via the SIP route.

 

Dream : One day will come when participation of Indian investors in Indian markets will be so high that Indian investors (and not foreign investors) will control the market. Our markets would not be affected if foreign investors enter or exit.

 

Like just mentioned, our stock markets lack the retail depth and currently are driven by the foreign portfolio flows which are hot and volatile flow. So every withdrawal results in fair downward correction....

Now the rate hike isnt really about the quantum but its symbolic in that it depicts a reversal in almost a decade and two signals the growing strength of the US economic growth and the FED's belief about its sustinability.

Our markets are expected to take it in its stride ie maintain its upward trend.... Though each hike will tigger a correction . Infact with all the economic woes around ( japan, europe and brics all struggling) i believe that earlier the rate uplift occurs the better it is for the markets - clears uncertainty and also signals a sustainable american economic recovery

 

Right. Also performance of companies mainly dependent on exports like it and pharma will improve.

 

Well thats just incidental in the larger picture. The main point is we need one of the big economy to fire... Especially with china too slowing down.

 

Please check the following link for "Why some Dalal Street veterans don’t give a damn to Fed liftoff talk"

https://economictimes.indiatimes.co...letter&ncode=d97f17350d1d91749da0108c368c7430

If you cannot access the above link, check https://economictimes.indiatimes.com

 

Points to consider : this is about : India's strong macro-economic variables would ensure that it easily weathers any rise in volatility in global markets as a result of a rate action by the Fed. Different from its impact on an already weaning FII interest on indian equities. Lower fund allocations and even withdrawals will occur as a result of rate hike leading to a fall.

FPIs have been net buyers of India debt : even i increased exposures to debt funds beginning Q4 last year and so aint suprised by the FPIs action. This was all in anticipation of rate cuts which have been effected in large measures.

And like i said in my earlier post - Our markets(equities) are expected to take it in its stride and maintain its upward trend.... Though each hike will tigger a correction. This is because of our strong macro economic factors and india remaining a good relative story

 

Good question @sandeep1802 . I also dont think that FII will exit indian markets for a mere 25 bps in america.Even if some FII exits it will not be huge outflow. . But the event is important for india as well as whole world.
this is what i think