Fund managers plan to top up India shares

Written by Markets Bureau | Mumbai | Updated: May 22 2009, 06:01am hrs
Despite a 2.31% drop in the benchmark BSE on Thursday, most fund managers are moving to top up their India exposure, which presages a strong surge in buying interest. The topping up follows the advent of a stable government to power in New Delhi.

A BNP Paribas report noted that investors benchmarked against the MSCI Asia Pacific Index except Japan, were 2.7% underweight on India. A Bloomberg report quoting the bank said If the investors boost their India holdings to 1 percentage point overweight, or more than the ratio represented in the benchmark index, the inflow could rise to $7 billion from actively managed funds.

While for the second consecutive day, foreign institutional investors were net sellers in the domestic markets, in the last five days they have bought $2 billion.In the year since January, net total investment by FIIs has been $3 billion. This weeks 15 % rally in the Sensex has helped India to outperform other Asian markets. The Sensex fell by 52 % in 2008 but has pulled back remarkably in 2009, especially in May.

The 30-share Sensex of Bombay Stock Exchange closed at 13,736.54 points. The broader S&P CNX Nifty of National Stock Exchange ended at 4,210.90 points, down by 59.40 points, or 1.39%. As per provisional figures furnished by BSE, FIIs were net sellers at Rs 2.14 crore. Domestic institutional investors (DIIs) were also net sellers at Rs 371.48 crores.

Indian equity bourses opened the day with negative gap following weak cues from the global markets and traded in the red throughout the trading session as intense selling was seen in the benchmark heavyweight indices. Inflation stood at 0.61% for the week ended May 9, compared to 0.48% a week earlier, according to a government announcement.

Despite the markets closing in the red, the breadth of the markets remained strong as out of 2,767 stocks traded on BSE, 2,097 stocks advanced, 627 stocks declined and 43 stocks remained unchanged.