Local investors pour cash into India's stocks

Middle-class traders undaunted by tariffs

- ALEX TRAVELLI

Foreign investors were on the run from India’s stock markets even before President Donald Trump declared economic war on India.

But the two main stock indexes in Mumbai, India’s financial capital, are up 10% over the past six months. And they have barely budged since Trump's 50% tariffs on India took full effect in late August.

The reason: Indian investors keep pouring money into stocks as fast as foreigners are taking money out, providing a measure of relief for the country’s businesses and economy.

The emergence of India’s homegrown investors as this year’s unsung hero reflects the growing confidence of India's middle class and the development of its domestic financial sector.

Foreign investment accounts for a far smaller chunk of the markets than it did 10 years ago, said Harsha Upadhyaya, a mutual fund manager at Kotak Mahindra Bank in Mumbai. Foreigners once owned 24% of stocks in India’s markets, but now hold barely 16%.

“The flows used to be dominated by foreign institutional investors, and that’s when their view mattered a lot,” Mr Upadhyaya said.

Indian institutional investors — mainly mutual funds and insurers — now hold a greater proportion of the market. As a result, India’s individual investors no longer take cues from international money managers who are chasing optimal returns around the world. Many automate their deposits into Indian mutual funds and just buckle in for the ride.

LOTS OF ROOM TO GROW