Foreign funds eye comeback at 9.5K level

By agencies   |   Tuesday, 23 May 2006, 07:00 Hrs
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MUMBAI: FII inflows tapered off after research outfits and emerging market gurus said the Indian market was in for a big correction.

Large investors like Franklin Templeton's Mark Mobius and Mark Faber continued to claim that they would continue to invest in Indian equities for their long term potential, but only if the valuation is cheaper.

Now that the market has fallen steeply, a lot hinges on new FII investment to pull the market out of the current morass.

Broking and investment firms like UBS and Citibank first put out their warning signals after the sensex crossed 9500 late last year. Their argument then was that valuations were running ahead of performance and leading companies were expected to turn out poor results on the back of high oil and commodity prices.

Some of these predictions have been proved wrong, as many sensex stocks like Reliance, Bharti, and Bajaj have turned in performance beyond the expectations of analysts. The three leading IT stocks Infosys, Wipro and TCS have also delivered strong results, much above the market expectation.

Domestic broking firms who service FII clients say that there were buying enquiries early on Monday. The FIIs had issued buy orders on select counters like Gujarat Ambuja, ITC and Bharti but at prices far below Friday's closing expecting the market to slip further.

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