IANS | 22 Mar, 2024
Foreign liquidity is drying up in small and mid cap space which can
slow down the price momentum, brokerage firm Elara Securities said.
"Need to closely monitor how the domestic liquidity shapes up from here," the brokerage said.
In CY23, India saw strong liquidity from both foreign and domestic investors. This created a frenzy in Small and Midcap space.
"We
are finally witnessing initial signs of slowdown in India flows. Total
inflows into India dedicated funds of $144mn (Large + Mid+ Small) are
slowest since May'23. This is largely on back of big outflow of $256mn
from Luxemburg domiciled funds while inflows from US and Japan domiciled
funds also dropped by 55 per cent-65 per cent from average levels," it
said.
India dedicated Long-only funds saw their first redemption
of $184mn in 1-year. India midcap funds had started taking slower
outflows since Jan'24 but pace has finally started expanding. Only place
where India flows remain relatively strong was in ETFs, the report
said.
In the past, India dedicated Midcap funds had seen strong inflows in 2014-2015 and 2017-2018 period.
In
the 2016 redemption cycle, Midcap stocks did not suffer as Domestic
flows were very strong post demonetisation. In 2018-2020 redemption
cycle, Midcap stocks took a big beating as domestic liquidity also
dried-up.
