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FII Inflows cross $18 bn in 2010

Mehul Shah  |  Mumbai 

Foreign investment highest ever in dollar terms in a single calendar year.

Foreign institutional investors (FIIs) have poured about $18 billion (Rs 81,880 crore) in Indian stocks so far this year, their highest investment in dollar terms in a calendar year.

FIIs’ net purchase were worth $17.89 billion in this year till Friday, according to data available on the Securities and Exchange Board of India (Sebi) website. Provisional data on the Bombay Stock Exchange (BSE) website shows they net-bought shares worth Rs 1,136.8 crore ($252 million) in the Indian market on Monday. This brings the year’s total to $18.13 billion (Rs 82,360 crore).

The highest FII inflow in both dollar and rupee terms was last year, when they had invested $17.64 billion.

The FII investment in rupee terms in 2010 is lower compared with 2009 because of appreciation in the Indian currency against the dollar. BS Research Bureau figures show a dollar fetched Rs 48.37 in 2009, on average, compared with Rs 46.05 in this year.

With the BSE benchmark, the Sensex, racing towards an all-time high, foreign investors are pouring money in funds focused on Indian stocks. For example, India-focused equity funds received $300 million inflows for the week ended September 22, according to data available from EPFR Global, which tracks fund flows in world

This was the highest weekly inflow into India equity funds in nearly three years. EPFR data showed foreign investors out $503 million in India equity funds till September 22.

At Monday’s close of 20,117.38, the Sensex is about 5.4 per cent away from its record high of 21,206.77, hit on January 10, 2008.

“Within emerging markets, India is looking attractive,” said Pauli Laursen, who oversees Indian equities at SydInvest Asset Management in Copenhagen.

In this month so far, FIIs have net-bought shares worth nearly $5 billion (Rs 22,700 crore). Helping make India the best performer within the emerging market pack in this month.

The 30-stock Sensex has gained nearly 12 per cent in this month so far. During the same period, China’s Shanghai Composite Index has fallen 0.4 per cent, Taiwan’s Taiex has advanced 7.55 per cent, South Korea’s Kospi has gone up 6.8 per cent, Brazil’s Bovespa has added 4.7 per cent and Russia’s Micex has moved up 4.7 per cent.

However valuations are not cheap, experts say. “Valuations are not in a comfortable zone. They are bit stretched,” said U R Bhat, managing director at Dalton Capital Advisors (India).

At Friday’s close, the Sensex traded at 19.1 times its estimated earnings per share for the current financial year, Bloomberg data showed.

First Published: Tue, September 28 2010. 00:25 IST