Fed rate cut leads to FII swamp in India

Post US Fed rate cut, Indian market has certainly emerged as the most favoured investment destination for foreign institutional investors (FIIs).

Since September 2007, till now 35 new FIIs has been registered with the market regulator Securities and Exchange Board of India (Sebi) taking the total number of FIIs to 1,112 till date.

Market experts says that most of the registration has come from second half of September. In September alone 23 new FIIs have been registered while in October till now 12 new FIIs have been registered.

During the same period 89 new sub accounts were registered with Sebi taking the total number of sub accounts to 3,403 till date.

Since September 18, 2007, FIIs have bought domestic equity worth Rs 24,156 crore till now and market experts says that the high amount of liquidity flow from FIIs is on the back of new entrants from Europe, US, Australia and south east Asia and whether these funds are of short term or long term in nature is too early to say.

Anita Gandhi, head, institutional business, Arihant Capital markets said, ?It is very much possible that the surge in the liquidity from FIIs is on account of new players. Large amount of money is coming from FIIs at these higher levels that too at a time of political uncertainty. This proves that they are taking calculated risk and are very bullish on India.?

Another institutional dealer with a leading domestic brokerage firm said that first half of CY 2007 saw insufficient fund allocation for India resulting in the Indian market underperforming when compared to other emerging markets. But now the trend is reversing and second half of CY07 is witnessing the deployment of massive amount of funds from FIIs.

Some of the prominent players among them include London-based Apax Partners Europe Managers Ltd, France-based ADI Alternative Investment, Germany-based Baader Service Bank, Generation Investment Management LLP from UK, Singapore-based Allianz Global Investors Ltd, Citigroup 401 (K) Plan from USA and Diversified Portfolios Fund Ltd from Channel Island.