Global fund managers are trimming India exposure as US trade talks sour

Nearly $2.8 billion have been redeemed from funds investing in India this year, according to data from EPFR Global.There have been consistent outflows of $70 million to $200 million per day from dedicated India funds since July 28, according to Cameron Brandt, Director of Research at EPFR Global, as the trade negotiations between the US and India took a turn for the worse.

However, it’s not a wholesale retreat, according to Brandt. “We are noticing that the managers of funds that have a choice have been trimming their exposure,” Brandt said

Foreign portfolio have net sold Indian stocks by over ₹77,753 crore as of August 5. Nifty 50 has pared nearly half of its gains for the year in the last one month.
The redemption in India flows stands out as the overall appetite for emerging market investments, except for China, has been steady last week.Asia ex-Japan fund allocations to India declined marginally to 16.3% in June from 16.4% in May, whereas allocations to India by global emerging market funds declined to 18.7% in June from 19% in May, according to EPFR data cited by Kotak Institutional Equities in a report dated July 25.

With consistent weekly inflows of up to $7 billion a week into global diversified and emerging market funds, the overall investor sentiment is strong, albeit off recent highs, according to Brandt.

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