September 12, 2013 Leave a comment
Foreigners currently own an estimated 22% of Indian equities.
The reason why foreign funds are not exiting India quicker is because they are heavily invested into quality expensive stocks, which are not worth selling at this point of time.
The long-term investment returns for foreign holders of the likes of HDFC or ITC have declined dramatically. Thus, the compound annual average return over five years of an owner of these two stocks in US dollars terms is now only 4% and 20%, respectively, compared with 13% and 30% in rupee terms.
The foreign ownership of Indian government securities is only 1.61% at the end of March, though it is up from 0.88% at the end of March 2012.