FIIs bet big on Indian bourses

FIIs bet big on Indian bourses

Pump over Rs 34,300 cr into the exchanges in Q2

During the July-September period, foreign institutional investors (FIIs) made a net investment of Rs 34,313 crore in equities, as per the data available with the market regulator the Securities & Exchange Board of India (Sebi). With Indian bluechips giving nearly 17 per cent returns during the period, FIIs are bullish on good returns from emerging markets, like India.

Analysts said nearly half of FII inflows have come via qualified institutional placements (QIP) and IPOs combined. “This trend of inflows would broadly sustain over the long term considering the strong dynamics of the Indian economy,” domestic brokerage firm Angel Broking said in a research note.

The trend of strong FII inflows to the tune of Rs 31,000 crore or US$6.3 billion witnessed during first quarter of fiscal year 2010 gained further strength during the September quarter this fiscal.

With this, total cumulative FII inflows in 2009 crossed the US$10 billion mark during September 2009 and stood at about Rs 60,000 crore (US$12.4 billion) at the end of the month.

Handsome returns
Indian markets gave 19 per cent return to those who invested during the July-September period. According to an analysis of MSCI Barra indices— that measures returns from various stock markets across the world— bourses in Brazil and Russia gave over 26 per cent return to investors while those in China gave only four per cent.

In the latest quarter, September saw the highest monthly inflow of Rs 18,300 crore. While fund flow in August was Rs 4,900 crore, in July it was Rs 11,000 crore. Interestingly, during the three month period last year, FIIs pulled out a net Rs 11,326 crore from the country’s stock markets, which saw Sensex giving a negative return of five per cent.

The global financial crisis turned worse with the collapse of US financial services major Lehman Brothers last September. Foreign funds pulled out money from Indian markets to meet obligations in their home countries. Last year, FIIs were net selle rs of Indian stocks worth Rs 52,900 crore, as per Sebi  data.

This trend continued till February 2009. However, by the end of March they started betting on Indian markets. FIIs invested about US$17.7 billion (about Rs 70,000 crore) in 2007, the highest ever so far.