‘Sell China, Buy India’ policy of FPIs cannot continue for long

The valuations in China at a PE of 9 is hugely attractive now compared to valuations in India with a PE of around 20 and, therefore, the ‘Sell China, Buy India’ policy of FPIs cannot continue for long, says V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

A declining dollar is a powerful trigger that can sustain the FPI inflows. The concern, however, is the rising valuations which are getting stretched, he said.

FPI flows into India are continuing unabated. The decline in the dollar index to below 100 on Friday, the lowest level in one year, is favourable to emerging markets. India is the largest recipient of FPI flows YTD among emerging markets, he said.

The selling in China continues and FPIs were sellers in EMs like Thailand and Vietnam also recently.

In July, through 14th, FPIs have invested Rs 30,660 crore in India. This figure includes investment through bulk deals and primary market, too, apart from investment through stock exchanges.

FPIs continue to invest in financials, automobiles, capital goods, realty and FMCG. FPI buying in these sectors have contributed hugely to the surge in prices of stocks in these sectors and the Sensex and Nifty scaling record highs, he said.