“In July, so far, India has been underperforming most markets, with a dip of 1.6% in Nifty. A significant contributor to the decline is the selling by FIIs. There is a clear pattern in FII activity this year so far. They were sellers in the first three months. For the next three months they turned buyers. And in the seventh month the trends so far indicate further selling unless some positive news reverse the downtrend in the market. Along with selling in the cash market FIIs have been increasing short positions in the derivatives market too, which reflect a bearish outlook. Elevated valuations in India and cheaper valuations in other markets will continue to influence FII activity.
A significant feature of economic activity in India during the recent years has been the resilience of luxury consumption and weakness in mass consumption. Early indications from Q1 results -good results from hotels industry- indicate continuation of this trend.
Niche luxury segments across sectors are likely to do well.”
