Surge in FII inflows seen on policy rejig

With foreign investment in Indian stock markets crossing US$11 billion so far this year, market experts expect FII inflows will continue on a sustained basis in the future amid hopes of government’s initiatives on policy reforms.

Foreign Institutional Investors (FIIs) have infused a net amount of US$1.02 billion (about Rs 5,692 crore) in August so far, taking the total for this year to US$11.4 billion (Rs 57,958 crore) in Indian equities, according to Sebi.

According to market analysts, despite a slow economic growth, high interest rate regime and weak monsoon, overseas investors are showcasing confidence in the Indian stock markets amid expectations of the government’s fresh initiatives on policy reforms.

“I think FII inflows will continue in the domestic equity market, given the fact that last year was bad for stocks. Also, weakness in the rupee is also favouring overseas investment.

 But, the biggest trigger is that FIIs are pinning hopes on the government’s fresh initiatives on reforms. However, if there are no policy reforms, we might not see the FII flows being sustained at the current levels,” Rajesh Jain EVP Retail Research Religare Securities said.

Marketmen also said the reason behind the renewed confidence by the FIIs in Indian markets is government indicating a soft stance on the controversial General Anti-Avoidance Rules (GAAR) and retrospective taxation issues.

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