FII buying at four-month high in Sept

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SummaryAn unexpected move by the US Federal Reserve to delay tapering of quantitative easing and measures taken by new RBI governor Raghuram Rajan

An unexpected move by the US Federal Reserve to delay tapering of quantitative easing and measures taken by new RBI governor Raghuram Rajan to shore up the rupee resulted in a huge turnaround in equity purchases of foreign institutional investors (FIIs).

Data showed FIIs net bought $2.07 billion of Indian equities in September – the highest in four months – largely led by hedge funds and long-only funds, that aggressively bought Indian shares after having waited on the sidelines for the right opportunity, market experts said.

In the previous three months, FIIs had net sold Indian equities of $3.7 billion – $946.5 million (August), $986.07 million (July) and around $1.77 billion in June -- as fears of QE tapering from the US Fed mounted.

Indian equities also recovered most of its losses from the month of August. The 30-share index, which dropped nearly 8% in the first two weeks of August to 17,900, jumped 15.5% from that point to 20,600-20,700 levels in mid-September.

The rupee has also recovered from its all-time low of 68.8250 per dollar seen in August-end to around 62-63 levels since Rajan took over on September 5.

However on a quarterly basis, FIIs net purchases dropped to the lowest level since June 2012.

For the three months ending September 2013, FII net purchases in Indian equities stood at a meagre $61.73 million.

FIIs had net sold $349.68 million of Indian equities in the quarter ending June 2012.

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