Investment inflows into India hit a three-month peak at $713 million, largely fueled by substantial investments in large-cap assets, marking a trend reminiscent of the 2003-2006 period. This surge, ongoing since October 2022, has remained consistently upward, as per Elara Securities' report.
Emerging markets, reaching a four-month high at $4 billion, were primarily buoyed by China's recovery and sustained investments in India, favoring predominantly large-cap funds.
Global investment sentiment surged post Federal Reserve comments hinting at potential rate hike reversals. US flows peaked at $26.3 billion, witnessing a rush into mid and small-cap funds, which had shown lesser activity since October 2022 market lows.
The S&P 500 nears its peak while the Russell 2000 index lags by 20%. Interestingly, the S&P Equal Weight Index outperformed the weighted index for the first time since January 2023, suggesting a broader market trend in the US after a prolonged 15-18 month period.
US mid-cap fund inflows surged to $4.7 billion, the highest since December 2021, while small-cap flows at $4.5 billion mark the second-largest since June 2022.
Key Points:
1. India experienced a surge in dedicated inflows, reaching a 3-month peak of $713 million, predominantly driven by large-cap investments. This marks a significant and consistent trend, reminiscent of the 2003-2006 period.
2. The momentum in India-focused inflows commenced in October 2022 and has shown a steady acceleration, according to a report from Elara Securities. Emerging market inflows also increased to a 4-month high of $4 billion, with a notable recovery in China and sustained investments in India, primarily concentrated in large-cap funds.
3. Following the Federal Reserve's comments on potential rate hike reversals, there's a growing sense of optimism in global flows. US inflows surged to an 18-month high of $26.3 billion, witnessing a notable influx into mid and small-cap funds, sectors that had limited participation in the recovery since October 2022.
4. While the S&P 500 index is approaching its record highs with a 2% gap, the Russell 2000 index remains 20% below its peak. However, the S&P Equal Weight index has started to outperform the weighted index, signaling a diversification in the US market after nearly 15-18 months.
5. Specifically, there has been a significant expansion in flows into US mid-cap funds, reaching $4.7 billion, the largest since December 2021. Additionally, small-cap flows amounted to $4.5 billion, marking the second-largest influx since June 2022.
(With Agency Inputs)
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