INSUBCONTINENT EXCLUSIVE:
adjusted for arbitrage fund flows, were down 5 per cent month-on-month, showing that a stabilisation has likely happened, albeit at levels
much lower than the $3-billion plus pace seen from August 2017 to March 2018
The firm said that the slowdown in fund flows was expected after the imposition of long-term capital gains tax and a dividend distribution
tax of 10 per cent on equities from April 2018
The figure of $2 billion a month could be the new inflow level to be expected from hereon, said CLSA.
However, any further weakening of
domestic flows could put pressure on midcaps, which are sharply down this year
The BSE Mid-Cap index is down 10 per cent so far this year while the BSE SmallCap index is down 12 per cent
subdued or FII flows need to pick-up
foreign investors have been largely bearish as valuations, despite corrections in between, have largely been expensive and earnings growth
CLSA in a recent report had said that Nifty earnings declined 1 per cent from the year ago period in the January-March quarter versus
expectation of 10 per cent growth, largely due to Axis Bank and State Bank of India
The firm had cut Nifty earnings per share estimate for FY19 by 3 per cent during the results season.
Foreign portfolio investors have net
sold shares worth Rs 1,000 crore so far in calendar year 2018 (till Wednesday) while mutual funds have pumped in `57,700 crore (till June 1)
FPI flows have been volatile this year
They sold heavily in February, April and May but were net buyers in January and March.
