A view of the ESB building in Mumbai. File | Photo credit: Vivek Bendre
Global economic factors such as inflationary pressures, monetary tightening by central banks and fears of recession in advanced economies have put pressure on REITs to sell in Indian markets, said the 2022 economic survey- 23 of January 31, 2023.
In addition, investors were sitting on gains in Indian stocks that could be made to offset losses elsewhere, the survey noted.
These factors led Foreign Portfolio Investors (REITs) to withdraw a net amount of ₹16,153 crore from the Indian capital markets in FY23 from April to December, compared to an outflow of ₹5,578 crore a year ago. one year old, with equity and debt. segments experiencing net outflows.
By segment, REITs made a net outflow of ₹11,421 crore in equity markets and ₹12,400 crore in debt markets. On the other hand, they invested a net amount of ₹8,662 crore through the Voluntary Retention Route (VRR) during the reporting period.
However, owing to the strong macroeconomic fundamentals of the Indian economy and the improvement in market risk appetite from time to time, assets in the custody of REITs have increased despite capital outflows driven by factors. worldwide, according to the survey.
Total assets under custody at REITs increased by 3.4% to ₹54 lakh crore at the end of November 2022, from ₹52.2 lakh crore at the end of November 2021.
Unaffected by REIT exits, Indian equity markets recorded a positive return from April to December 2022 as investments by domestic institutional investors (DIIs) acted as a countervailing force against REIT exits, making the Indian equity market relatively less sensitive to large-scale corrections.
The Indian stock market posted a resilient performance, with the bluechip Nifty 50 index returning 3.7% from April to December 2022, and the benchmark BSE Sensex index closing up 3.9% at the end of December. 2022, compared to its closing level on March 31. 2022.
Even among major emerging market economies, India outperformed its peers from April to December 2022, while global stock markets fell due to geopolitical uncertainty.
“Net inflows of DII and net investments of equity mutual funds were observed in FY23 (through November 2022),” the survey said.
The 42-member mutual fund industry recorded net inflows of ₹70,000 crore in 2022 (through November), up from ₹2.5 lakh crore a year ago.
Despite lower net inflows compared to last year, assets under management (AUM) of the mutual fund industry increased by 8.1% to reach 40.4 lakh crore at the end of November 2022, on an annual basis. , thanks to market performance.
Mutual fund flows this year included a net inflow of ₹90,000 crore into equity-focused schemes and ₹1,091 crore into solution-focused schemes. However, a net drawdown of ₹1.1 crore lakh was seen on debt schemes as well as ₹13,649 crore on hybrid schemes.
According to the survey, cash and hybrid plan outflows were mainly affected by increasing interest rate cycles, liquidity needs and anticipated corporate tax liabilities.