Global funds cautious on stocks after election surprise
Global funds were net short on over 280,000 index-future contracts and were long on over 100,000 put options contracts, according to provisional exchange data compiled by Bloomberg, indicating expectations for equities to fall further.
Foreigners’ short positions in Indian stocks held near a record high, underscoring continued caution even after Prime Minister Narendra won crucial backing from allies to form a government.were net short on over 280,000 index-future contracts and were long on over 100,000 put options contracts, according to provisional exchange data compiled by Bloomberg, indicating expectations for equities to fall further.
AgenciesA surprise loss of parliamentary majority for Modi’s Bharatiya Janata Party upended investor confidence in the pace of economic reforms and policy continuity to boost growth. That, coupled with expensive valuations of about 20 times one-year forward earnings, is prompting overseas funds to rethink the prospects of local shares.
“Markets want more certainty so they can price in a long term trajectory for corporate earnings,” said Niraj Bhagwat, equity portfolio manager for Asia Pacific at Wellington Management SP Pte. “Modi has never ran a coalition, we have to see how it goes.”
Indian stocks have clawed back most of the election-led losses as of Friday, supported by buying from local institutional and individual investors. Foreign funds have sold about $3 billion worth of local shares on a net basis since the election outcome through Thursday, according to provisional data provided by the exchange.
Source: Stocks-Markets-Economic Times
