The Bombay Stock Exchange building in Mumbai, India.
Indian equity exchange-traded products attracted $1.5 billion of net inflows in July, their second-highest monthly inflow this year as well as the second-highest on record, a BlackRock report on global ETP flows said.
In contrast to the record $2.3 billion that flowed into Indian equity ETPs in March, July's inflows came largely from international investors, with $1.2 billion flowing into U.S.-listed Indian equity ETPs, the report said.
Flows into Europe, the Middle East, and Africa-listed Indian equity ETPs totaled about $200 million in July, while Asia-Pacific-listed Indian equity ETPs attracted about $100 million, according to Karim Chedid, head of investment strategy for iShares EMEA at BlackRock.
Prior to March, the monthly net inflow record for Indian equity ETPs was $1 billion set in January 2015, Mr. Chedid said in written comments.
"India remains an intriguing investment proposition," he said. "On the one hand, a supportive policy backdrop and robust macro fundamentals look to be tailwinds for the equity market, but on the other, the market has not necessarily been affected by the domestic macro backdrop historically."
The Reserve Bank of India, the country's central bank, surprised markets by pausing rate hikes earlier this year and has stuck to that for the time being, including at its meeting last week, Mr. Chedid said, adding that market pricing is pointing to a rate cut potentially coming as soon as early 2024.
"At the same time, improvement in the current account deficit — which had been a significant detractor to international investors — has led to a record high services trade surplus," he said, adding that the continued strength of domestic demand underpins BlackRock's positivity on India's economy, "especially in light of a global economic slowdown."
Still, risks remain, he said, adding that "a rise in global commodity prices could weigh on India, a net commodity importer, while food inflation poses a risk to the economy."
Overall, flows into global ETPs totaled $88.1 billion in July, moderating slightly from $99.8 billion in June due largely to a slight drop off in equity buying, BlackRock's report said. Equity ETP flows fell to $59.7 billion in July from $76.9 billion in June.
"Despite the drop from June, July still represented the second-highest inflow month this year for equity ETPs, against a backdrop of reduced equity allocations so far in 2023," the report said.
Fixed-income ETP flows rose slightly to $30.9 billion in July from $26.9 billion in June, according to BlackRock. Commodity flows stayed in negative territory, with commodity ETPs posting $3.6 billion of outflows in July after seeing outflows totaling $5.1 billion in June.
