Relations between India and Canada are going through a bad phase after Canada's allegations of Indian involvement in the murder of pro-Khalistan leader Hardeep Singh Nijjar and the subsequent expulsion of diplomats. At the same time, experts believe that this will have very little impact on Canadian investment and overall market sentiment in India.
Concerns are increasing due to the latest tension in India-Canada relations. It is estimated that due to this, Canadian investment is going out of India. The special thing is that Canada's largest pension manager, Canada Pension Plan Investment Board, has a significant stake in Indian companies.
Canada Pension Plan Investment Board had disclosed an investment of $ 21 billion i.e. Rs 1.74 lakh crore in India about a year ago. Among the major holdings is Kotak Mahindra Bank of Mumbai. Talking about overall, Canadian firms have invested in 70 listed companies of India.
Major holdings of Canadian pension funds
Experts believe that Canadian pension funds have collectively invested more than Rs 1 lakh crore in some Indian companies. Even if no risk is visible at present. In case of increasing tension in the coming time, some pressure may be seen on these companies.
According to June-quarter shareholding pattern data available on BSE, the Canadian pension fund held 6 per cent stake in Delhivery at the end of the June quarter.
As of June 30, 2023, it held about 2.68 percent stake in Kotak Mahindra Bank, 2.42 percent stake in Zomato and 2.18 percent stake in IndusTower. Canadian Pension Fund also has 1.76 percent stake in Paytm and 1.47 percent stake in Nykaa.
The Canadian Pension Fund also has stakes in Indian firms that are listed in foreign markets. It has a stake of about $11.92 million in Wipro's US-listed shares.
Canadian pension funds also hold about $21.7 million in US-listed shares of Infosys. In ICICI Bank's US-listed shares, the Canadian pension fund's stake is about $10 million.
trade between india and canada
According to Invest India, Canada is the 18th largest foreign investor in India with total investments of about $3,306 million from April 2000 to March 2023.
Canadian investments represent about 0.5 percent of total FDI (foreign direct investment) flows into India. India was Canada's ninth largest trading partner in 2022.
The contribution of services and infra in the total FDI investment from Canada to India was 40.63 percent.
According to Invest India, more than 600 Canadian companies have a presence in India and more than 1,000 Canadian companies are actively doing business in the Indian market.
According to data available with the Commerce Ministry, India's total exports to Canada in FY 2023 were $ 4,109.74 million, which was 0.9 percent of India's total exports of $ 450,958.43 million in the previous financial year.
India's total imports from Canada in FY 2023 were $4,051.29 million, which was about 0.6 percent of India's total imports of $714,042.45 million compared to the previous year.
According to a PTI report, India's exports to Canada include pharmaceuticals, gems and jewellery, textiles and machinery, while Canada's exports to India include pulses, timber, pulp and paper and mining products.
If we talk about the money that people of Indian origin send from Canada to their people in India, then according to World Bank data, India received about 859.83 million dollars in this form from Canada in 2022.
There will be no impact on market sentiment
Experts say that the sourness in India-Canada relations will not have any significant impact on the sentiments of the domestic market. They also say that it is unlikely to impact Canadian investments in India and even if it does, investors should buy from Canadian pension funds in stocks that see selling.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, said tensions in India-Canada relations are a negative sentiment in the near future. However, it is not likely to have any long-term impact on the market.
Vijayakumar said Canadian pension funds' investments in ADRs of India's new age digital companies like Paytm, Zomato, Nykaa and Delhivery and blue chips like Infosys, ICICI and Wipro have not been able to influence the market. Even if there is a decline due to these shares, investors can invest in those shares.
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