NEW DELHI (TIP): Listed fund activity turned negative in the Indian market during October on the back of redemptions or exits by exchange traded funds (ETFs). Overseas funds withdrew $454 million from Indian equities during the month. Emerging market (EM)- focused funds contributed to the majority of the Indian redemptions even as FII (foreign institutional investors) activity across the region remained negative. EM-focused activity continued to remain in the negative territory in October. EM-dedicated funds pulled out $475 million from the Indian market in October.

EM-dedicated ETFs withdrew $251 million during the month. EM funds have remained bearish on Indian equities for the past three months. Total inflows from EM-dedicated funds into the Indian market stood at a mere $368 million in 2014. Funds benchmarked to the MSCI EM recorded outflows of $4.4 billion during the month. ETFs saw outflows worth $2.7 billion, while active fund redemptions added $1.7 billion to the tally. India-focused ETF flows however managed to remain in the positive territory, indicating that passive interest for the region continues.

Inflows from India-dedicated ETFs stood at $46 million in October, data compiled by Kotak Institutional Equities showed. ETFs, which follow a passive investment strategy, tracking MSCI India Index have remained positive over the past three months even as active funds saw redemptions. Allocations to India by Asia (excluding Japan) and global emerging market (GEM) funds reached record levels in September. They have moved up 2.5%-2.8% in the last one year.

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