India making the most of China’s harsh Covid restrictions? FIIs diverting funds

Market


As zero-Covid policies followed by their authorities hit China as an investment destination, multinational companies look at India as an alternative, according to a Financial Times report.

Indian benchmark indices hit a new high last week as foreign investors pumped in money into equities. As per NSDL data, FPIs infused 36,239 crore in the equities during November – the second highest monthly buying in 2022 after August where FPIs invested 51,204 crore.

“Indian equities hit record high as investors look beyond China. Nifty 50 up 7% YTD, compared w/MSCI’s broad Emerging Markets Index, which is down 16%. Supply chain disruptions caused by Beijing’s zero-Covid policies boost India’s appeal to multinationals,” tweeted market veteran Holger Zschaepitz, quoting a Financial Times report.

Case in point, there have been talks of Apple shifting some of its production to India. “Apple Inc. has accelerated plans to shift some of its production outside China, long the dominant country in the supply chain that built the world’s most valuable company, say people involved in the discussions. It is telling suppliers to plan more actively for assembling Apple products elsewhere in Asia, particularly India and Vietnam, they say, and looking to reduce dependence on Taiwanese assemblers led by Foxconn Technology Group,” Wall Street Journal reported.

Last month, Telecom and IT Minister Ashwini Vaishnaw said India is set to get the biggest Apple iPhone manufacturing unit in Hosur in Bengaluru.

Despite economic chaos at the global level, Indian benchmark indices, Sensex and Nifty, last week surged to a record high level.

India also became the second most highly valued equity market worldwide after New Zealand, reported Financial Times citing Societe Generale analysis. The French bank has predicted that Indian stock market will grow by 19.6 percent in 2023 in terms of earnings per share.

Mint could not independently confirm the findings of the report.

In its latest report, World Bank said India’s economy is expected to grow 6.9% in the current fiscal year versus an earlier forecast of 6.5%. The Bank, however, trimmed its expectation for next fiscal year to 6.6% from 7% earlier.

On the other hand, Morgan Stanley recently downgraded Singapore and Indonesia to equal-weight and India and Malaysia to underweight. The global investment bank upgraded its stance on China stocks to overweight from equal-weight position it had held since January 2021.


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