FIIs pump in USD 17.88 bn in 9 mths; cross 2007 record level

The net purchase of USD 17.88 billion is the highest ever investment by the overseas firms in any single year in dollar terms. The current inflow has surpassed the record level of USD 17.65 billion in domestic equities during 2007.

Significantly, this huge inflow of USD 17.88 billion came in just nine months of 2010. The record investment of 2007 was in dollar terms and in rupee terms the highest ever inflow from overseas fund houses was seen in 2009.

Last year, FIIs were the net purchaser of shares worth Rs 83,423 core (USD 17.45 billion), the highest ever in the Indian equity market. During the same year, the stock market benchmark Sensex had recorded a gain of over 80 per cent.

As per the data available with capital market regulator Securities and Exchange Board of India (SEBI), foreign FIIs have made a net buy of shares worth USD 17.88 billion so far in 2010 and marketmen believe the inflow will not stop here.

The low interest rate regime followed by many advanced economies to avert recession, coupled with better economic performance of emerging markets such as India and China, are ways to attract a chunk of foreign inflows, analysts said. "India is one of the hot spot for the FIIs as they see a better return from here. We are bullish that shopping will go on in coming days also," IDBI Federal Life Insurance Chief Investment Officer Aneesh Srivastava said.

On the back of huge inflows from FIIs, Sensex had been on a rising-spree in recent sessions. It regained the magical level of 20,000 points last week after a gap of 32 months. "FIIs continue to pour money into Indian financial assets amid bright prospects for economic growth and corporate earnings," an analyst said.

With such huge inflows from FIIs, marketmen believe the Sensex could reach its record high-level of 21,200 easily in the coming period. The Sensex had hit its lifetime high of 21,206 on January 10, 2008.

In so far September alone, foreign funds pumped in USD 6.73 billion (Rs 31,005 crore) in local stocks, as per the SEBI data. FIIs play a significant role in domestic equity markets and their movement (inflow and outflow) causes fluctuation in benchmark indices.

After pouring in Rs 83,000 crore in local markets, these investors began exiting in early 2010 and in January they were net sellers of Rs 500 crore. But from February, the scenario started changing and they were net buyers of Rs 1,216 crore. In April, FIIs were net purchasers of shares worth Rs 9,361 crore, after pumping in Rs 19,928 crore in March.