Foreign investors have been net sellers of Indian equities for more than eight months.
Raamdeo Agrawal, Chairman of Motilal Oswal Financial Services
Raamdeo Agrawal, the co-founder, and chairman of Motilal Oswal Financial Services believes that if the current macroeconomic conditions persist then there is a likelihood that the current pace of selling by foreign investors will continue.
“I am surprised by the sheer quantum of FII selling. They own about 20 percent of the market so there is room to sell more. If nothing changes then the current pace of selling from foreign investors may continue,” Agrawal told CNBC-TV18 in an interview on June 9.
The veteran market expert believes that foreign investors have been selling Indian stocks due to the huge premium they enjoy over their emerging market peers and because of rest of the portfolio of foreigners have underperformed. Agrawal believes that if Indian markets start underperforming other emerging markets going ahead that could turn the sentiment of foreign investors.
Foreign investors, who have been net sellers of Indian equities for more than eight months, have sold close to Rs 2.5 lakh crore worth of stocks in the same period.
“I don’t think till something changes in the current (macro) setup, the market will remain quite stressed. I will remain very cautious in the market in what I buy and at what price I buy,” Agrawal said.
That said, Agrawal indicated he will remain fearless if the market gives opportunities to buy “good companies” at reasonable prices. Although, he argued that most “good companies” are still expensive.
Agrawal said that analysts were hiding in 2024 and 2025 earnings estimates for companies to make them look attractive whereas he was not even certain about the next quarter. The market expert said it is better to look at trailing 12-month earnings when analysing companies.
Agrawal said that banks, information technology, and manufacturing companies were likely to stand out in the current market. “There will be no problem for topline growth in India… the only issue is which companies have the pricing power to boost earnings,” Agrawal said.
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