Is there correlation between flows and returns?

While the flows are important, sentiment is a bigger factor than liquidity, says a report

Samie Modak 

That markets do well when overseas inflows go up and correct when foreign institutional investors (FIIs) press the sell button is a popular adage heard on the Street. However, an analysis of net institutional investor inflows and market returns shows it is more than just net inflows that drive the market. For instance, so far in 2017, net inflows of close to $3 billion have come in but the markets have climbed 11.2 per cent, in contrast to 2014, when the markets got net inflows of just $629 million but the Sensex soared 30 per cent. While the flows are important, sentiment is a bigger ...

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Is there correlation between flows and returns?

While the flows are important, sentiment is a bigger factor than liquidity, says a report

While the flows are important, sentiment is a bigger factor than liquidity, says a report That markets do well when overseas inflows go up and correct when foreign institutional investors (FIIs) press the sell button is a popular adage heard on the Street. However, an analysis of net institutional investor inflows and market returns shows it is more than just net inflows that drive the market. For instance, so far in 2017, net inflows of close to $3 billion have come in but the markets have climbed 11.2 per cent, in contrast to 2014, when the markets got net inflows of just $629 million but the Sensex soared 30 per cent. While the flows are important, sentiment is a bigger ... image
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