How Domestic Investors' Inflows Protect Markets from Severe Downturns: Jefferies India's Insight
Mahesh Nandurkar, Head of Research & MD at Jefferies India, discusses how domestic investor inflows have played a crucial role in stabilizing the Indian markets over the past 12 to 18 months. These inflows have not only prevented major market corrections
Domestic InvestorsMarket StabilityJefferies IndiaFinancial SavingsIposReal Estate NewsOct 18, 2024
In 2024, domestic inflows have been particularly robust, averaging around $8 billion per month. This translates to over $90 billion annually, a significant figure that represents more than 25% of household financial savings in India. Nandurkar emphasizes that while these inflows are expected to continue supporting the market, their sustainability at such high levels is a cause for concern.
According to Nandurkar, a more realistic long-term figure for domestic inflows might be around $4 to $5 billion per month. This adjustment is based on the current economic conditions and the potential for market dynamics to shift.
The robust demand for equity has also led to a sharp increase in supply, with numerous Initial Public Offerings (IPOs), Qualified Institutional Placements (QIPs), and block deals entering the market. Despite this increased supply, current domestic inflows have managed to absorb it effectively. However, Nandurkar warns that if this high supply continues, it could cap near-term market returns, potentially leading to a decline in domestic inflows.
He advises investors to exercise caution over the next 3 to 6 months, as market dynamics could change dramatically due to these factors. Nandurkar's insights highlight the delicate balance between supply, demand, and investor sentiment in the Indian market, emphasizing the need for strategic and informed decision-making.
Frequently Asked Questions
What is the average monthly domestic inflow in the Indian market according to Mahesh Nandurkar?
According to Mahesh Nandurkar, the average monthly domestic inflow in the Indian market is around $8 billion.
How much do annual domestic inflows represent in terms of household financial savings?
Annual domestic inflows represent over 25% of household financial savings in India.
What is a more sustainable long-term figure for domestic inflows, as per Nandurkar?
A more sustainable long-term figure for domestic inflows, according to Nandurkar, is around $4 to $5 billion per month.
What factors are triggering the sharp increase in supply in the Indian market?
The sharp increase in supply in the Indian market is triggered by numerous IPOs, QIPs, and block deals entering the market.
What advice does Nandurkar give to investors for the next 3 to 6 months?
Nandurkar advises investors to exercise caution over the next 3 to 6 months due to potential shifts in market dynamics.
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