With foreign funds? appetite for Indian stocks undiminished ? close to $14 billion has flowed in since Narendra Modi was named the BJP?s prime ministerial candidate last September ? the Sensex on Monday hit a new high of 23,551 points while the broader Nifty closed at 7,014. India remains the second-best-performing market in Asia in 2014. However, although the market isn?t expensive relative to its historic average multiple, domestic institutions have been sellers. The pace of sales, however, has slowed ? in CY12 they sold a net $10.7 billion while in CY13 the number was $13 billion. This is partly because retail investors have wanted to cash out as stock prices appreciated, leaving mutual funds and insurers with smaller corpuses. While corporate earnings are unimpressive and much of India Inc remains highly leveraged, investors are turning to cyclicals. The rally has become broader with mid-caps participating. The good news is that cash volumes are trending up, possibly accompanied by higher deliveries.
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