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Rs 100.82 billion FII inflows in 5 months

BS Markets Bureau

Net investment flows from foreign institutional investors have reached a whopping Rs 100.82 billion in less than five months of the current calendar year till May 17. This is the highest portfolio inflow in the last four years.

Net FII investment in the whole of last year was only Rs 68.44 billion. However, in dollar terms, the portfolio investment flows at $ 2.28 billion in the current year (till May 17) is much below the $3.05 billion investment in 1996, which was the best year so far for portfolio inflows.

Business Standard had reported in early January that foreign portfolio investment flows into the country during 2001 was expected to cross last year's figures despite concerns over the proposed reduction in India's weightage in the MSCI emerging markets index.

"The investor-friendly and economy-boosting budget proposals have also contributed to the upbeat sentiment. Given the current market position where almost the entire liquid stocks have witnessed sharp corrections, it is the right moment for investing in the Indian capital market," the head of a foreign joint venture mutual fund said.

FIIs have been consistent buyers on the Indian bourses despite a series of apparent setbacks like the earthquake in Gujarat in January, political uncertainty following the Tehelka tapes episode and policy uncertainty in frontline sectors like telecom.

"The political drama is a discounted factor as one thing is clear: that all political parties, and even a coalition government other than the current one, will go ahead with economic reforms," a fund manager said.

Nicholas Toovey, managing director, (Asia Funds), DSP Merrill Lynch said: "India's services sector and the consumer sector have strong potential for growth and we are bullish on India."

"India has given good returns among the emerging markets in Asia in the past couple of years. Moreover, this year India is all set to emerge as the second largest growing economy after China. It is unlikely that FIIs would reduce their exposure here," a fund manager said.

FIIs are bullish on India for two reasons. One, India is expected to be one of the fastest growing economies in the world after China and some other South East Asian economies.

Two, the potential of the Indian market is vast as penetration and consumption levels are much below global levels. Besides, the country has emerged as the single largest supplier of intellectual capital after the technology boom, according to fund managers.

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