21 June: Market Watch + Insights

Today’s market watch with Otter ??? uncovers major undercurrents in the global financial landscape that spell huge potential for India. From the great China-to-India asset migration to the IPO pipeline heating up, there's a lot to unpack.

FUNDS FLOW FROM CHINA TO INDIA SHORES

The tremors of change are being felt across global markets as foreign investors undertake a major reallocation. Over the past three weeks, ?????China funds experienced outflows of $2.3 billion.

• Meanwhile, ?????India-dedicated funds saw an impressive ???$2.4 billion inflow in just two weeks, setting a record pace.
• Leading this shift were ??? US investors, pouring in $700 million, followed by significant contributions from Ireland ($447 million), Japan ($433 million), and Korea ($130 million).
• The focus of these inflows has been on large-cap funds, with mid and small-caps yet to gain similar traction.

European asset allocators are increasingly weighing the best approach to capitalize on India's growth — whether through specialized India funds or broader Emerging Market (EM) mandates.

The verdict: India is quickly emerging as the new EM darling, challenging China's long-held dominance.

INDIA BONDS: THE GLOBAL HOTCAKE

It's finally time for Indian bonds to have their moment. With JP Morgan set to include ???Indian bonds in its EM index from June 28, a potential $40 billion influx ?? is on the horizon.

• FIIs have already pumped in $10 billion since the announcement in September 2023.
• Top global funds like Pictet and Western Asset are eagerly loading?up on Indian debt.
• The Indian rupee was crowned Asia's best-performing currency in 2022.

With nearly 96% of the "Fully Accessible Route" bonds limit still available for investment by FPIs and FTSE Russell eyeing inclusion, this is just the ????beginning of India's bond market globalization. The government's fiscal discipline, RBI's vigilance, and strong demographics make a compelling case!

Even as foreign investors ride high, local players are taking some chips off the table. India's biggest bondholders, Public Sector Undertaking (PSU) banks, have sold Rs 2,800 crore ($342 million) of sovereign bonds in the past 5 sessions.

Are they booking profits or preparing for the deluge of foreign inflows? Only time will tell.

THE GLOBAL STAGE: US & EUROPEAN THEATRICS

As the Indian story plays out, global markets are dancing to their tunes:

• US stocks retreated ?? from record highs as Treasury yields rose
• European shares??? got a sugar rush from tech and real estate rallies
• Swiss stocks got an extra kick as their ?????central bank cut rates (not a typo!)

So while the world grapples with inflation, rate hikes, and geopolitical tensions, India seems to be humming a different tune. But can it march to its beat forever? We'll keep an eye out for any global spillovers.

IPO PARADE: FURNITURE TO PHARMA

The primary market is buzzing??? with activity as companies line up to give you a piece of their pie:

• ???Stanley Lifestyles (furniture) to raise Rs 537 crore; IPO opens June 21
• ???DEE Development Engineers (pipes) IPO subscribed 24.59x on ongoing Day 3
• ???Emcure Pharma gets SEBI nod for Rs 1,100 crore IPO in July
• ???Ola Electric secures SEBI approval for Rs 7,250 crore IPO?

Whether you're bullish on home improvement, infra development, healthcare or EVs, there's an IPO for every taste and risk appetite. But as always, ?? look before you leap and read the fine print.

YOU ARE WHAT YOU INVEST

As you navigate the complex world of investments, remember this: your portfolio is ???a mirror of your financial soul. It reflects your goals, beliefs, and even your insecurities:

• Asset allocation??? shows your risk appetite and investment horizon.
• Sector choices??? reveal your growth philosophy and economic worldview.
• ESG leanings??? (or lack thereof) speak to your values and social consciousness.

But here's the catch — 40% of CEOs admit to "green gushing"??? for fear of being called out for greenwashing. So, as you build your portfolio, make sure it's true to who you are, not who the world wants you to be.

SPECIAL SITUATIONS & TACTICAL PLAYS

For those looking to spice up their portfolio with some off-the-beaten-path strategies, here are some options:

• Special Opportunity Funds that bet on ?? corporate actions, regulatory shifts, etc.
• With as little as Rs 5,000, you can invest in the ???newly launched India's first EV & New Age Auto ETF that captures the electric mobility value chain by ????tracking the Nifty EV and New Age Automotive Total Return Index. The fund will cap auto manufacturers at 40%, allowing 60% exposure to ancillaries and emerging tech.

The diverse sector exposure makes the EV ETF an interesting option to gain broad-based exposure to this emerging theme.

Do explore these if you're looking to add some zing to your core holdings. But as with any tactical play, make sure you understand the risks and align them with your broader asset allocation plan.

OF POLICY PUTS & LIQUIDITY NUDGES

Even as ???markets ebb and flow, policymakers are working behind the scenes to keep things humming:

• RBI??? raised risk weights on consumer loans to curb unsecured credit growth
• Frequent VRR auctions are being used to ????inject liquidity amidst tightening conditions
• The possibility of more rate hikes is on the table with inflation still above the comfort zone

In a world where central banks are walking the tightrope between growth and inflation, these policy signals can have far-reaching implications for your investments.

Keep a close eye on the RBI's moves and how they impact asset classes.

CONNECTING THE DOTS

As we survey this vast and varied landscape, a few common threads emerge:

• India's attractiveness is growing on the global stage, drawing in capital across asset classes
• Domestic investors are deploying surplus cash through SIPs, IPOs & tactical funds
• Policymakers are keeping a watchful eye on macroeconomic stability & market integrity
• Sustainability remains a key theme, but actions need to match intentions

The ?? stars are aligning for potentially historic foreign capital inflows into Indian equities and bonds in the coming months and years. As China faces challenges, India's stable fundamentals, policy reforms, and growth potential are being recognized by global investors.

The road ahead is laden with opportunities & obstacles alike. But for those who can sift through the noise, stay true to their goals, and adapt to the times, the rewards can be immense.

Maybe the real treasure is not the ?? pot of gold at the end of the rainbow, but ?? the rainbow itself - the myriad hues & shades of the Indian investment landscape that make it so vibrant & exciting.

Stay curious, stay invested, and most importantly, stay true to yourself.

Your Trusted Investing Partner,

Otter by CapitalVia