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00:00 We have with us Cameron Rand, Director of Research of EPFR joining in.

00:04 Cameron, good morning and good evening rather.

00:06 You've tracked this data for decades together. You've been through multiple elections set ups

00:12 in India. You know what this data looks like at the back of your hand. And hence, we want to

00:17 understand from you over the last couple of weeks, or maybe after seeing a phenomenal six to eight

00:23 months in terms of flows for India, do you now feel like flows that are coming into India dedicated

00:29 funds are slowing down or have slowed down? The short answer is no. I have been expecting

00:38 them to get a bit slower and there was definitely a dip in the February, March time period,

00:45 but they've picked right back up again. I think we're looking at over 600 million

00:50 into dedicated India funds this week, which is certainly well above the historic average

00:58 and more in keeping with what we were seeing coming into this year.

01:01 So it's a fair assumption for me to make that the last two weeks have been phenomenal in terms

01:07 of inflows into India? Certainly, what I'm talking about is flows into dedicated India

01:16 funds, which is sort of blunt proxy for investor sentiment towards India. It's certainly been

01:23 running at stronger levels than I saw in the 2019 and 2014 elections. But in both of those cases,

01:34 it was generally positive, just not to the degree I've been seeing over the past,

01:39 actually, over the past year. Cameron, and this is ETFs or non-ETFs,

01:47 because I do know outside India, it is the active fund managers that draw some more attention than

01:53 passive funds. Where is the trend right now? Is it ETF, non-ETF, because those are also a lot more

01:59 expensive? Yeah, it's a mixture of both. ETFs are certainly expanding their footprint in terms of

02:12 India flow as much as they're doing in nearly every asset class. And we're seeing active

02:20 managers, certainly the diversified funds, being a bit more cautious towards India than the

02:27 allocations that the passive funds are buying to. But it's a hot market on both sides of the active

02:41 passive divide at the moment. The one headwind from a fund perspective is that diversified global

02:53 emerging markets and the Asia regional funds have seen pretty relentless outflows. And every time

03:00 that happens, they have to sell whatever weight they have towards India, which has been rising

03:06 to meet those redemptions. Okay. Cameron, hi, Tamanna here. So, just to put into perspective,

03:14 because we're sitting here wondering why we're seeing these kind of FII outflows. And one of

03:20 the theories is perhaps global investors are waiting for the election results, which will

03:27 come in on June 4th in India to revisit their India allocations. From what you're saying,

03:34 it seems as if the outflows from India are incidental to other global allocations and

03:40 not necessarily an India story. Is that the right way to look at it?

03:43 It is. When investors look purely at the India story, sentiment is still very strong.

03:51 But a lot of the flows, certainly from a fund perspective, are tied to sort of relative

03:58 allocations of diversified funds. And those are both choppier in terms of the flows and

04:08 sentiment towards India on the part of the managers isn't as bullish

04:11 as we're seeing with individual investors.

04:16 Is this also in some part, you know, how would you relate this to China now improving the latest

04:26 Chinese data, Chinese trade data points, one more indicator to a resurgent China?

04:31 Do you see that impacting India flows in the medium to long term?

04:36 Certainly not right now. The narrative for China having been relentlessly positive for so long

04:49 has flipped. And by that, I mean that investors are now treating good news out of China with a

04:57 great deal of skepticism. So we've actually seen pretty heavy outflows from dedicated China funds

05:04 this week. I think there's quite a bit of pent up demand to sell. So when there's an improvement

05:12 in China, we've tended to see people cashing out. I think in the long run, obviously,

05:20 the India China comparison is important, but I think in some ways, India is going to get a pass

05:31 for the remainder of the year, because the focus here is going to be very much on the presidential

05:35 election and how whoever wins it in November approaches the US Chinese relationship.

05:43 Come on, let's talk about the debt markets, because while equity markets,

05:49 like you indicated, have been very hot for FIs, India's inclusion in the JPM

05:55 index has drawn considerable amount of funds in the last few months into Indian paper.

06:02 Indian debt versus Indian equity, where do you see the momentum continuing over the next couple

06:07 of months? I think it will be more evident on the equity side, and that's largely just because

06:17 there's a longer track record. People are more used to buying into Indian equity markets,

06:26 know where to find the information that is useful to making those decisions. So I think

06:32 there'll be something of a learning curve for Indian fixed income markets and the funds that

06:42 provide access to those. So I'm not expecting a real takeoff and certainly haven't seen it in a

06:49 fund flow perspective, but I do think that India's story is long term enough that we'll start to see

07:01 a steady increase in both flows to dedicated funds and allocations in the diversified funds.

07:09 Cameron, we'll leave it at that. Thank you so much for taking the time out and being with us

07:16 and giving us your thoughts. Really appreciate your time this morning.

Will India Emerge As FII Favourite Destination? | NDTV Profit

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