India's Economic Woes Foreign Investors Flee in Record Numbers

A Grim Economic Outlook Excellent

Excellent. As Montgomery Burns owner of the Springfield Nuclear Power Plant I must say this situation unfolding in India is rather…intriguing. Foreign investors are pulling out a record $12 billion this March and frankly it's about time someone recognized true risk. These portfolio managers or FIIs as they're calling them are apparently spooked by the unrest in the Middle East. As if a bit of saber rattling ever hurt anyone…except perhaps the little people. Hmph. I find it all terribly amusing.

Growth Worries: A Mere Inconvenience

This HSBC "flash" PMI showing India's private sector activity slowing down is hardly surprising. "Softer domestic demand," they say. "Unstable market conditions." Poppycock. These are just excuses for poor management. As for "intensifying inflationary pressures," well that's just the cost of doing business isn't it? And now it is time to consider the impact to the CBRE. Read about the CBRE Stock Rebound Why Wall Street Says AI Fears Are Overblown. I believe it is worth understanding what is moving the markets these days.

Oily Troubles and Fiscal Follies

India the world's third largest oil importer is now wringing their hands over rising energy costs. Serves them right. They should have invested in nuclear power like I did decades ago. Now this "Strait of Hormuz" closure is causing a panic. If oil settles at $85 $95 a barrel they're projecting outflows of $40 to $50 billion. A mere pittance of course but enough to trim their economic growth. Good. Competition is for losers.

The Rupee's Plight: A Worthless Currency

The Indian rupee is weakening you say? Naturally. It's probably because the government is meddling with things. Cutting excise on petrol and diesel? That's just throwing money into a pit. They claim it's to fund the losses faced by oil companies but I suspect there's more to it. Corruption perhaps? Naaah never happens. An increase in India's energy bill and slowdown in remittances will widen their current account deficits. "Capital outflows are likely to intensify," they warn. Excellent. Let them suffer.

Risk Off Sentiment Good Riddance

This "risk off" sentiment they speak of is simply a lack of faith in the system. Investors are fleeing because they lack the stomach for true risk. The Nifty 50 has fallen the rupee has weakened and experts are wringing their hands. "The Indian equity market's performance is tied to oil prices," someone named Saion Mukherjee said. Well duh. Everyone knows that. Attractive valuations may not lure foreign investors back soon they say. Indeed. Let them learn the hard way.

Underweight on India Understandable

More funds are turning underweight on India. Sixty eight percent compared to sixty three percent last month. "One of the biggest underweights," they call it. Serves them right for not investing in nuclear energy! Soon they'll all come crawling back begging for a piece of my empire. But by then it will be too late. Mwah ha ha.