MUMBAI: The recent spate of selling in the Indian equity market by foreign funds notwithstanding, more than 200 foreign funds are coming to India for a three-day conference to meet Union and state ministers, top executives of leading Indian companies as well as analysts. The conference, being arranged by global financial major Morgan Stanley, will have more than 400 participants, the largest since the 2008 global financial crisis began, said Ridham Desai, strategist & head, India equity research, Morgan Stanley.

According to Desai, long-term investors are still buying into India while it’s the momentum investors who look for 15-20% — irrespective of market, asset classes or the duration of investment — who sold in the Indian market in the last three months.

“There are FIIs who believe in the long-term India story who have been structurally investing in India and have been holding a very constructive view about India. These investors invested here even when the macroeconomic fundamentals were quite bad or even worsened as the months passed by. But that did not shake their confidence in Indian equities,” Desai said.

“This is partly because India offers a very good selection of bottom-up stories, and partly because the long-term story was always intact although we went through a cyclical downturn. Even during the recent volatility, since March, these investors are still buying. The absorption of Sun Pharma block worth $3.5 billion in what was a very bad market is an example of FII confidence in India,” he added. On the other hand, momentum investors, who were buying Indian stocks last year when markets were going up and everyone liked to ride the momentum, backed off recently as the momentum had shifted to Shanghai. “So now China is attracting momentum investors and India has lost a bit of it,” Desai explained.

Currently, momentum investors are not keen to invest in India because of several reasons like rise in oil prices, some legislations not being passed, the bad earnings season, etc.

However, the Indian markets look attractive to investors with a two-three years’ view, Desai said. “The growth cycle is turning, lead indicators are inflecting and the capex cycle is turning. The government has done a fair bit of work on the infrastructure side and also on rectifying stalled projects. Government expenditure, which crashed in the last four-five months of the last fiscal, is now turning, the fiscal headwinds are going away,” he said.

