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FII in Indian equities picking up
By siliconindia
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Thursday, 03 February 2005, 20:30 IST
MUMBAI: After making a tepid start in the New Year, the flow of overseas investments in Indian equities is set to gain momentum with a slew of firms rushing to cash in on improved economic growth and corporate earnings.
As many as 19 foreign institutional investors (FIIs) have entered the Indian stock market in a little over one month in 2005, taking their total number to a staggering 656.
And foreign funds are queuing up for equity shopping in Asia's fourth largest economy from Germany, Australia, Singapore, Luxembourg, Austria, Denmark and the US.
Experts say if the current trend of rush of foreign FIIs towards India continues unabated in the months ahead, the country may see another year of record overseas investments into the domestic trading ring.
"The foreign funds investments did start on a sluggish note this year, which resulted in lacklustre trading patterns on the bourses," said Deepak Shah, a senior analyst with brokerage firm Pranav Securities.
"Now it is showing signs of gaining momentum with many new players entering into the fray lured by the earnings prospects. India's growth story and corporate profitability continue to be major attractions for them," Shah told IANS.
Some of the FIIs who have entered the Indian market in 2005 include New York-based Hercules Capital Advisors, Germany's Hauck Aufhauser Privatbankiers Kgaa and Nordea Bank of Denmark.
Other prominent investors include Luxembourg-based ING Luxembourg, Australia's Macquarie Bank, and Ireland-based Multi-Style Multi-Manager Funds, according to the Securities and Exchange Board of India (SEBI) documents.
FIIs, termed as the backbone of India's liquidity-hungry equity market, invested a record $8.5 billion in the domestic market in the last calendar year.
The sharply higher overseas fund inflows propelled the benchmark share market index to its all-time high in December.
In the current calendar year till Wednesday, overseas equity investors have pumped in $390 million. There was a massive outflow of overseas investments earlier last month after the US Federal Reserve hiked interest rates.
Record overseas fund inflows in the last three days of January, however, helped the benchmark share market index to end the month at almost the same level as it had touched at the end of 2004.
"Despite turning occasional sellers on the bourses, the foreign funds' interest in the Indian market continue to be very high," said Neeraj Deewan of New Delhi-based Quantum Securities.
"The number of new overseas portfolio investors that have entered the market so far is a clear reflection of their faith in the long-term prospects of the local equities," he added.
"If we don't come across any major adverse developments in the days ahead, the level of foreign institutional investments may well surpass the previous year's record. The budget may provide fresh impetus for this."
The general budget for the fiscal year 2005-06 is likely to be presented to parliament towards the end of next month.
India's capital market won a major endorsement last year when the nearly $170 billion pension fund California Public Employees' Retirement System, known as CalPERS, decided to enter into the local trading ring.
The global fund major, whose moves are closely watched by other overseas investors for possible leads about the attractiveness of an emerging market, has invested as much as $100 million since its foray in April.