FIIs pull out three-fourth of 2008 investment

Mumbai: Foreign institutional investors (FII) have pulled out an estimated $13 billion from the domestic stock market in 2008. It means FIIs have withdrawn nearly three-fourth of over $17 billion invested in this year. Whereas, FIIs have shifted their focus towards debt market by making a net purchase of over three billion dollars during 2008 compared to about two billion dollars in the previous year.

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According to the analysts, investment from FIIs might increase again in India in the coming year after the first two quarters in 2009 as Indian valuations have become quite attractive for long term investment.

Alex Matthews, Head, Geojit Financial Services research, said that the FII inflow is likely to continue for the first two quarters in 2009 but the situation is likely to improve in the second half of this year. "Inflows from Japan are likely to come into the domestic market as the interest rates are down to virtually zero, while launch of Shariah stock index may also attract some funds," he added.

"The FIIs outflow is likely to gradually taper off and they will start putting in money in the coming year as the valuations of Indian stocks have become attractive and the weakening rupee against the dollar would attract them to invest more in the country," opined P K Agarwal, President Bonanza Portfolio Research.