Indian funds suffer as investors return to developed markets

The Indian equity market has fallen 18% and seen a $1.5bn outflow of foreign investment since the start of the year as inflation fears drive investors back to developed markets.

Stretched valuations, corruption worries and the ongoing Egypt crisis have also weighed on India’s leading index. The BSE Sensex lost more than 12% in January, its worst monthly decline since 2008. Managers investing in the region said this is a temporary blip, and believe the market remains attractive over the long term. Hugh Young, managing director of Aberdeen Asset Management Asia, said: “Resurgent inflationary fears and profit taking on the back of last year’s rally are weighing heavily on investors’ minds.” HSBC investment director Sanjiv Duggal points to “significant redempt...