Global fund flows have shifted direction and gears. The result is seen in FII outflows from Japan and India. Under allocated global funds may now be forced to invest in China. Clearly, this means we are likely to see FII selling for a while in our markets. Money will probably move out more in the coming days and shift into China. This was hardly what the market expected a month ago.
Meanwhile, the focus will shift to the US elections early next month. Domestic flows into equity mutual funds remain strong and this is a factor that’s keeping our market from falling. The Hyundai IPO coming up next week will be an acid test of our market’s liquidity. If the IPO gathers a massive sum from the public, ends up heavily over subscribed and witnesses a block buster listing, then we will see a rush of IPOs moving in. However, if the IPO fails to gather large sums as oversubscription, then the likelihood of a slew of future IPOs collecting monies would stand diminished.
Overall, the markets are very interestingly poised and the coming week will be decisive in setting the market narrative and direction.