FII inflows cross $21 billion

Dec 08 2012, 00:00 IST
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SummaryWith the road paved for additional reforms measures — after the UPA-led government won the vote on foreign investment in retail — and increased expectations of interest rate cut by the Reserve Bank of India, foreign institutional investors (FIIs) are on a buying spree, with year-to-date inflows into Indian equities crossing $21-billion mark — the highest since 2010 and second highest in the last 14 years.

Indian mkt has attracted highest amount of flows compared with its Asian peers so far

With the road paved for additional reforms measures — after the UPA-led government won the vote on foreign investment in retail — and increased expectations of interest rate cut by the Reserve Bank of India, foreign institutional investors (FIIs) are on a buying spree, with year-to-date inflows into Indian equities crossing $21-billion mark — the highest since 2010 and second highest in the last 14 years.

According to BSE and Bloomberg data, FIIs pumped-in $1 billion into Indian equities during the last five trading sessions, after pumping in an equal amount of money in the last week of November on hopes the government will take more steps to boost economic growth and investment.

Data also shows that Indian market has attracted the highest amount of foreign flows compared with its Asian peers so far. South Korea stood second with $12.6 billion since January, followed by Japan ($9.94 billion), Taiwan ($4.13 billion), Taiwan ($4.13 billion), Philippines ($2.3 billion), Thailand ($1.89 billion) and Indonesia ($1.55).

Indian markets posted their third weekly gain led by sharp gains in real estate, oil & gas, capital goods, and power utilities’ stocks as foreign investors continue to bet on high beta stocks at a time when the government has begun its divestment programme and the primary market is also showing early signs of revival. On a weekly basis, Sensex and Nifty gained nearly 0.5% to their new highs in almost two years. However, it was the broader market that seems to be leading the rally, with BSE Midcap and Small indices gaining nearly 2.5% each on a week-on-week basis.

Realty gained the most this week, with the BSE Realty index rising 5.18% even after the 1% correction on Friday. Among other gainers, BSE Power index, BSE Oil & Gas index, BSE Consumer Durables, BSE Capital Goods, CNX Bankex, also advanced in the range of 1-3% from the previous week.

Experts said the market was seeing revival in domestic retail and individual investors’ sentiment, that usually tends to follow the investment judgment of the FIIs. With the government announcing series of reforms measures in September to boost economic growth, easy liquidity conditions, foreign institutions (rating agencies and brokerages) expressed their positive stance on Indian equities.

“The gains came in largely on the back of the passage of the multi-brand retail Bill in both houses of Parliament. This has

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