Norwegian pension fund Global to invest $2 billion in Indian stocks

22 October 2008

Indian equity markets in recent weeks, which have been beat-down to almost a 4 digit index , are set to see a welcome respite with the Norway's pension wealth fund, Global, planning to invest $2 billion (about Rs9,772 crore) in Indian stocks over the next three months till January, providing a much-needed boost to the stock markets that have been pulled down by the flight of FII investments.

The move by the fund also reflects a confidence in the fundamentals of the Indian economy by the oil-flush Scandinavian nation.

The recent global financial turmoil has resulted in poor returns on Global's equity portfolio, even as Norway's net inflow from petroleum exports has been higher than expected, forcing the fund to seek beter returns from relatively safer emerging markets.

This renewal of interest from the sovereign funds could provide much-needed capital for the Indian markets.

This has come about with Global increasing India's weightage in its investment portfolio. According to deputy secretary general in the Norwegian finance ministry, Thorvald Moe, India's weightage  in its overall portfolio was recently raised from 0.2 per cent to 0.94 per cent, which will enable funds of around $2 billion to flow into India stock markets by the end of this year.

India and China, with close to 1 per cent weightage, are among the leading emerging markets in the SWF's portfolio, said Moe who is in charge of Norway's pension funds.

Global has already invested about 1.8 billion Norwegian kroner ($270 million) in Indian markets. Norwegian Moe told senior indian finance ministry officials, "we are not bothered about the stock markets coming down."

Indian stock markets have witnessed a sharp fall since the global financial crisis started with the news about the bankruptcy of Lehman Brothers and the Sensex has fallen by around 51 per cent to 10217 levels as of 21 October 2008.