FIIs return to Street in style

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Mumbai: Foreign investors are turning more bullish on the domestic markets, with their investments in equities already touching Rs. 40,000 crore so far — nearly half the record amount infused by them in 2009.

Foreign institutional investors (FIIs) are expected to pour in more money into the local markets in the coming weeks especially with improving economic conditions, according to analysts.

The net investment by overseas investors into domestic stocks reached Rs. 39,360 crore ($8.6 billion) till July 16, data available with SEBI showed.

So far this month, these entities have already pumped in Rs. 8,283 crore ($1.7 billion.) In 2009, foreign fund houses pumped in Rs. 83,400 crore into the local equities, the highest inflow in a single year.

“India is one of the fastest growing economies and has been resilient in past turbulences. Gains from Indian markets have been higher than many other developed markets and investors would like to put in money here,” Elara Capital chairman and chief executive Raj Bhatt said. The London-based Elara Capital is recognized as an FII by Sebi.

Though the Eurozone debt turbulence had led the FIIs to pull out a whopping Rs. 9,400 crore from local markets in May, confidence started resuming in June and they infused over Rs. 10,000 crore in that month.

FIIs invested a net $2.33 billion into domestic markets in the April-June quarter. “Risk appetite among the foreign buyers is resuming and they are bullish about the India growth story. FII inflow is likely to jump in the coming period,” Bonanza Portfolio assistant vice-president Avinash Gupta said.

The FIIs play a significant role in the domestic equity markets and their movement (inflow as well as outflow) causes fluctuation in the benchmark indices.

In the past week, they were net purchaser of shares worth Rs. 6,590 crore. During the period, the stock market benchmark BSE Sensex recorded a net gain of 0.69 percent.

“We are bullish about the India growth story and hope it will continue to attract heavy fund inflow from the overseas,” Way2Wealth Brokers chief operating officer Sunil Ramrakiani said.

Foreign fund houses were the net seller of shares valued over Rs. 52,000 crore in 2008, which triggered a record annual decline. However, in 2009 the story was entirely different.

But they again started selling shares in early 2010. In January, they were net sellers worth Rs. 500 crore. However, from February, the scenario started changing and they turned net buyers.

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