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Strong Dollar to Cap FPI Flows into EMs, Including India: Bank of India MF CIO
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Moneycontrol•29-09-2026, 06:42
Strong Dollar to Cap FPI Flows into EMs, Including India: Bank of India MF CIO
- •Alok Singh, CIO at Bank of India Mutual Fund, states that the strong US Dollar Index indicates cautious and risk-averse global investors, potentially limiting FPI allocations to emerging markets, including India, in the near term.
- •The equity market is expected to remain range-bound due to global macroeconomic factors, but strong domestic institutional and retail investor participation will support market valuations.
- •A broader consensus suggests that adverse effects on corporate profitability will likely be concentrated within the current financial year, with a gradual mean reversion expected in the second half.
- •India's macroeconomic fundamentals remain robust, with high-frequency indicators showing sustained economic resilience and healthy domestic demand, driving market performance primarily through domestic factors.
- •Bank of India MF maintains a cautious view on the chemical sector due to strong macro headwinds, despite some recent margin revival and optimism.
Key Questions Answered
The continued strength of the US Dollar Index suggests global investors remain risk-averse, as a stronger US dollar typically restrains capital flows into emerging markets.
Strong participation from domestic institutional investors and retail investors should continue to provide an important source of support for market valuations.
While the market is seeing some revival in margins and optimism after past headwinds, macro headwinds remain strong, prompting a continued cautious view on the sector.
