REITs become net buyers of shares in January so far; invest Rs 3,202 cr

After three months of selling frenzy, foreign investors turned net buyers in the first week of January by pumping Rs.3202 crore into Indian stocks as the market correction gave them a good buying opportunity.

Going forward, REIT flows will remain volatile relative to US Fed expectations

rising rates, growing concerns about the Omicron variant, and high inflation levels, experts said.

The latest entry came after witnessing a net outflow of Rs 38,521 crore in October-December 2021. Prior to that, foreign portfolio investors (REITs) had made a net investment of Rs 13,154 crore in September of l ‘last year.

According to data available from depositories, REITs injected a net sum of Rs 3,202 crore into Indian stocks from January 3-7.

Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said: “Intermittent buying by REITs could be attributed to the correction in interim markets, which would have provided them with good buying opportunities.”

He further said that REITs continue to be cautious in their investment approach amid a surge in the coronavirus pandemic across the world, including India.

Although the world has had the experience of fighting two waves in the past, the new variant – Omicron – continues to be a problem. Moreover, a sharp rise in cases would also result in the imposition of a lockdown to curb the spread of the pandemic, which again may impact economic growth, he added.

Apart from equities, REITs have also been net buyers in the Indian debt market, albeit marginally. During the week they bought net assets worth Rs 183 crore.

IPF flows to Indian debt markets have been sporadic for a long time with no clear direction. Last year they were net sellers to the tune of Rs 1.04 lakh crore.

VK Vijayakumar, chief investment strategist at Geojit Financial Services, said one of the main concerns for REITs is the tightening of monetary policy in the United States, with the rise in the yield on 10-year US bonds that may trigger sales in emerging markets.

Since the Indian market is resilient and flows from institutional retail and domestic investors are significant, REITs are unlikely to support sales unless the market rises sharply, he added.

“With the expectation of a Fed rate hike, growing concerns over Omicron and high inflation levels, we expect REIT flows to emerging markets including India to remain volatile, ”said Shrikant Chouhan, Head – Equity Research (Retail), Kotak Securities, said.

Intermittent corrections in the markets could trigger purchases from REITs, Srivastava said. However, with valuations continuing to be at high levels, along with other concerns, India might not be as attractive to them as it was some time ago.

(This story was not edited by Business Standard staff and is auto-generated from a syndicated feed.)

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