Investors in India’s $ 2.8 trillion equity market are mitigating the economic impact of the world’s worst coronavirus outbreak, which would delay any recovery and could trigger a “correction” in shares, according to the country’s top-performing fund manager.
The benchmark S&P BSE Sensex has climbed for two straight weeks, a period during which the country’s daily virus infection, as well as related deaths, have hit the records. Domestic institutional investors, including mutual funds and insurers, made a net investment of $ 1.5 billion in the stock in April, compensating for similar outflows from foreign funds. This trend continues till now in May.
India has imposed many restrictions on people and businesses, many on a state-by-state basis. But as the outbreak widens, Prime Minister Narendra Modi is under pressure to tighten regulations across the country, which will slow down an economy that, according to many forecasts, is set to rise in double digits this year.
Indian stock futures slipped in early Asian trade on Tuesday, leading to a broader decline in regional equities amid rising concerns about inflation. SGX Nifty 50 futures slipped 1.6% in Singapore.
The Nippon India Small Cap Fund managed by Rachh has returned 28% so far this year, the top performer among funds that manage at least $ 500 million, data compiled by Bloomberg show.
The Sensex climbed 0.6% on Monday, the fourth day of gains, to close at its highest level since April 29. The gauge has risen nearly 91% from its March 2020 low, boosted by $ 23.3 billion in foreign income and optimism last year. The measures will help the engineer a strong economic revival.
Even as business was disrupted most of the year, small-cap stocks were among the biggest winners, rallying faster than the broader market. With the help of Nippon’s small-cap fund Shine in 2021, it outperformed and became more expansive.
The fund, which allocated 11.3% of its assets to the chemicals sector at the end of April – the largest for any industry – has returned about 113% in the last 12 months. Consumer non-durables and software are the other top sector holdings.