INSUBCONTINENT EXCLUSIVE:
ET Intelligence Group: Have stock valuations in India reached such levels that long-term investors and overseas funds find them unattractive
Delivery volumes on both Mumbai exchanges seem to indicate just that.
On the NSE and BSE, delivery volumes in May dropped to 33.03 per cent,
compared with the fiveyear average of 41.76 per cent, according to Bloomberg data
The combined volume on both exchanges (cash market) remained in line with the one-year average of $5.27 billion
The divergence suggests that traders are more active on the bourses these days than longer-term investors.
Outstanding open interest in the
stock futures in May stood at Rs 1,100 billion, the lowest in one year, although the market delivered 12 per cent returns in the
interim.
Foreign portfolio participation is also tepid
FPI transactions in May dropped to 13.4 per cent against an average of 16 per cent of the total in the past 12 months.
The primary reasons
are low churning of portfolios by FPIs, which prefer quality large-cap companies
With no significant investment triggers, FPIs are either deploying fresh money in existing stocks and sectors or exiting due to elevated
