Despite poor quarterly results, foreign investors remain (Weekly Review)

Despite poor quarterly earnings by corporate India, foreign investors continued to pump cash into the country's equity markets during the week ended April 17.

The Foreign Portfolio Investors (FPIs) remained net buyers in the Indian equities market for the week ended April 17, they bought stocks worth only Rs.914.12 crore or $146.55 million, according to the data with the National Securities Depository Limited (NSDL).

However, the foreign investors sold stocks worth Rs.322.17 crore or $51.64 million in the week under review.

For the previous week ended April 10, the FPIs had bought stocks worth Rs.2,391.82 crore or $383.45 million. At that time the foreign investors had sold scrip worth Rs.266.95 crore or $42.83 million.

The Foreign Institutional Investors (FIIs) along with sub-accounts and qualified foreign investors have been clubbed together by market regulator Securities and Exchange Board of India (SEBI) to create a new investor category called FPIs.

According to analysts foreign investors continue to be interested in the Indian equity markets due to healthy growth prospects, possibility of interest rate cuts, rising consumer demand and industrial activity.

"Despite the disappointing fourth quarter results, foreign investors have shown that they are interested in the Indian market for its long term prospects. However, they will now be interested in seeing execution of policy reforms and measures announced by the government," Anindya Banerjee, senior manager, Kotak Securities told IANS.

According to Devendra Nevgi, chief executive of ZyFin Advisors, the Indian markets are in a situation where corporate earnings need to catch up with the expectations of the investors.

"Fresh investments in the market would only take place depending on the outlook that the companies give in their fourth quarter results," Nevgi added.

The investors during last week's trade showed that mere endorsement of economic growth potential by international financial institutions is not enough for them and that the corporate India's earnings have to catch-up with the high expectations.

The benchmark 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE) lost 457.28 points or 1.58 percent during the weekly trade session ended April 17.

The market dampener came even though India's economic growth potential was endorsed from the likes of the World Bank, IMF, Asian Development Bank, Organisation for Economic Co-operation and Development (OECD), Moody's and the Economist Intelligence Unit.

Experts added that markets will also look forward to the apex bank on any signs of future rate cuts as major inflation indicators have come inline with expectations and that banks have started to lower lending rates.

The March CPI (consumer price index) inflation came at 5.17 percent, lower than 5.37 percent CPI for February. Decline was also observed in the wholesale price index (WPI). It fell by (-) 2.33 percent (March 2015 over March 2014) from (-) 2.06 percent for the previous month.

Other major trigger for foreign investors will be the parliament's budget session which will resume from next week. The government is expected to aggressively push key pending bills like the ones on the now re-promulgated land ordinance and on black money stashed away abroad.