It seems that foreign institutional investors (FIIs) have reposed more faith and confidence in India?s growth story when compared to domestic mutual funds. FIIs have pumped in net investments worth Rs 13,318.30 crore in the domestic equity market in the month of July which is also its highest net investment in any single month in CY 2007. This constitutes 41.29% of the total net investment of FIIs in 2007 till July 10. In CY 2007 FIIs had made a net investment in equities to the tune of Rs 32,250.20 crore.
The huge inflows from FIIs in the month of July is also on account of the two huge IPOs of DLF and ICICI Bank in June 2007, which generated a lot of FII interest, and both of these issues saw pay-in from such investors in the month of July.
More importantly, this massive inflow of funds from FIIs had come in just eight trading sessions of this month after keeping a low profile in the month of June. In June 2007, FII net investment in equities was a meager Rs 1,643.10 crore.
On the other hand the domestic mutual funds (MFs) have been net sellers to the tune of Rs 457.80 crore in the month of June in equities while they have found comfort in parking their money in the debt market to the tune of Rs 3,736.20 crore.
Rajen Shah, CIO, Angel stock Broking, said, ?India is a very promising destination for foreign investors as it is the second largest growing economy in the world which cannot be ignored. If we compare the Indian market with other emerging Asian markets, the total m-cap of FIIs to the total m-cap of the entire market is only 20% where as it is 22% and 24% respectively in Korea and Taiwan. So compared to them we are at a lesser level until now and tend to stand at a better position in attracting FII investment.?
On the low activity on the MF side, MF managers are of the view that net selling of Rs 457.80 crore is only a marginal figure and the activity of MFs cannot be judged on the basis of just 10 trading sessions in the month of July.
Sandeep Neema, CIO, JM Mutual Fund, said, ?MFs selling to the tune of Rs 457.80 crore in July is only a marginal figure. With the market at the higher level, there can be a general portfolio reshuffling in the fund houses. Mutual funds may book profits on some stocks and look at those stocks which are looking attractive and give better returns.?