FII money came via emerging market funds
Foreign institutional investors or FIIs pumped in more than $24 billion into Indian stocks during 2012, but experts tracking inflows shows that India-focused offshore funds and ETFs registered outflows of $1.8 billion during the year.
If the FII money is not coming in via the route of India focused offshore funds and ETFs, then the where is the foreign money coming from?
“There are a number of funds which have partial allocation to India in their portfolios. These primarily include emerging market funds, Asia-Ex Japan funds, BRIC funds and other global equity funds.
A large part of the inflows into the Indian stock markets also comes in via the route of such funds having partial allocation to India in their portfolios,” Morningstar said.
In fact, top ten emerging market funds (Virtus, Vanguard, iShares MSCI) accounted for $4.50 billion of FII investment in 2012. But India-focused funds and ETFs had registered a cumulative net outflow of $1.8 billion during the year 2012, compared to a net outflow of $5.4 billion registered during the year 2011.
“The volatility in the rupee, coupled with macroeconomic concerns of a slowdown and ballooning deficit weighed on sentiments, and resulted in outflows for most part of 2012 from the India focused offshore funds,” says a study by US-based research firm Morningstar.
One big contributor of flows into India in 2012 have been emerging market stock funds. These funds have a decent allocation to India in their portfolios, and have registered huge inflows from investors
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