The share of FII holdings in the total equity assets of Rs 4.9 lakh crore has increased to 30.16 per cent as on July 30 as compared with 28.88 per cent on June 30. FIIs have been net buyers in July to the tune of Rs 1,183 crore in equities as compared to a miniscule amount of Rs 311 crore in June and a net outflow of Rs 3,251 crore in May 2004.
Foreign funds total portfolio value has increased to Rs 1.48 lakh crore in July as compared with Rs 1.38 lakh crore in June. This is a reversal of the declining trend since April 2004, when it had touched an all-time high of Rs 1.67 lakh crore.
Interestingly, while FII equity holding has increased, the value of equity holding by mutual fund has declined. Holdings by FIIs in the Indian markets declined during the three months ended June 2004, the holdings and share of mutual funds increased from 18.17 per cent (Rs 90,338 crore) in March 2004 to 20.37 per cent (Rs 97,413 crore) in June. Further, MFs share has declined to 18.14 per cent or Rs 88,803 crore at the end of July 2004, in contrast to the FII trend.
Indian equities had touched a low in mid-May and the indices continued to remain weak till late June. The benchmark BSE Sensex remained in the range of 4,560-5000 points. This lead to the FII buying from lower levels, according to market sources.
According to Investsmarts head of PMS Sharad Shukla, Uncertainty regarding the political scenario in India, hardening of interest rates in the US markets and fears of a slowdown in China, had led to the selling pressure from FIIs in May and June. Most of the apprehensions have not come true. Reforms have been continuing and corporate results for the quarter ended June 2004, have also been very encouraging. As a result, we have witnessed buying interest from FIIs in July. The trend is continuing in August, though it is still not very robust.
Market sources add that the share of FIIs in the Indian equity markets peaked in April since they had invested heavily in the public issues during February and March, most of which were listed in March and April.