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Overall Foreign Interest In India Remains High After Election Email this page
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BANGALORE: India as a country is known to have the capability to re-establish investor‘s confidence in its markets, even during the toughest of times. Increase in capital flows, foreign direct investments and overseas entities’ participation shows that the Indian market has done pretty well in recent times. Foreign companies are viewing South-Asian nations as a strategic hub for their operations and investments. It is seen that people in India are interested in making more of their investments abroad. According to a data given by Thomson Reuters recently, the outflows of Indian funds were $786 million last month, which is the highest since the global financial crisis. This report shows the increasing demand for India-only funds by the investors outside the country.
Investors in other countries believe in diversification of investments and thus they prefer to invest in Indian-only funds for instance Aberdeen Global Indian Equity Fund , the world's biggest India-only fund run by Aberdeen Asset Management PLC , accounted for around 40 percent of the outflows, or a net $328.8 million, according to the data this week. After the new government stepping in, even the declining interest of funds in India has increased. According to this data by Reuters, most of the investors prefer to diversify their investments in different countries than sticking to one country itself. When compared to $20.1 billion shares purchased by the foreign investors last year the foreign investors invested a net of $8.8 billion in Indian shares so far this year. "In the last six months sentiment has turned positive for India because of the elections and expectations of a better government," said Niranjan Risbood, director of Fund Research at Morningstar India. "But overall, India has faced a lot of macro problems and investors are still reluctant to put their money into India-specific funds, so most of the money coming into India is through diversified funds."

The net outflows in May compares with $123.51 million withdrawn from India-only funds in April and is the highest since $814.04 million were redeemed in October 2008. When compared to $33.9 billion last year ends the combined assets under management of offshore India-only funds have shrunk from $55 billion in 2009. At the end of the elections the Aberdeen attributed the selling to some profit-taking after shares hit record highs.

"We've seen some heavy selling towards the end of the month purely on valuations as the market hit all-time highs," James Thom an investment manager in Aberdeen's Asian equities team said. "Investors are taking the opportunities to take some profit on the election event."

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