FIIs pump $1.5 billion a month since Feb

The equity markets have seen healthy foreign inflow in the past six months, with some doubt now on whether the pace would be maintained. Foreign institutional investors (FIIs) pumped about $9 billion (Rs 60,000 crore) in the period between February and August, an average of $1.5 billion (Rs 10,000 crore) a month, show data from Bloomberg. This saw the benchmark indices climb 25 per cent. There was a similar pace of inflow for the six months ended April 2015 but the markets remained almost unchanged.

South Korea, Taiwan and Indonesia also saw robust inflow. South Korea got a net $10.1 billion of foreign portfolio inflow (FPI) in the period and Taiwan got $14 billion.

“FIIs have been increasingly taking a positive view on Indian markets. Emerging markets (EMs) as a whole have made a great comeback in terms of FII inflow during the past six months. This renewed interest has pushed the markets to new highs,” says U R Bhat, managing director, Dalton Capital Advisors (India). The pace of foreign flows, however, could taper. The US Federal Reserve is expected to raise rates and concerns remain over other central banks’ commitment towards loose monetary policy.

There was a spell of FII selling in the past  week, amid worry about a rate increase by the US Federal Reserve on the coming Wednesday. In the past five sessions, FPIs have net-sold equities worth $190 million, the data showed.

Analysts say the performance of Indian equities would closely mirror other EMs in the near term.