Betting high on the Indian market, foreign investors have purchased stocks and bonds worth Rs 10 lakh crore in the financial year ending March 31.
Foreign institutional investors (FIIs) have purchased stocks and debt securities worth Rs 9,92,595.15 crore in 2010-11, according to the latest available data with Sebi (Securities and Exchange Board of India).
At the same time, FIIs sold shares and bonds worth Rs 84,6157.71 crore during the financial year, still leaving behind an investment of over Rs 1.46 lakh crore for the financial year. In dollar terms, foreign funds invested $32.22 billion.
FII inflows are described as ‘hot money’ because they can be pulled out anytime. In the calender year 2010, overseas investors infused a whopping Rs 1.79 lakh crore or $39.47 billion. FIIs had poured in Rs 83,423 crore in the Indian market in 2009.
Market experts said it was strong FII inflows that provided the much-needed warmth to Indian capital markets at times when the global economy continued to reel under the pressure of financial sector crisis. According to analysts, FIIs have been pumping funds into emerging markets like India because of their strong growth potential.
Besides, rising concerns over the European countries’ debt issue, political unrest in the West Asia and North Africa, and nuclear disaster in Japan are also driving foreign funds into the Indian market.
Market analysts further said that FII inflows into the country will continue to rise this year as well because Indian market continues to be attractive.
“FIIs are bullish on the Indian market as the stock market is on self-correction mode and quite attractive at this time. Besides, the situation in the rest of the world is not good, so, they don’t have much opportunity,” CNI Research Head Kishore Ostwal said.
He further said, “FII inflows were not disturbed by the 2G scam, financial bribery scandal and inflation concerns. We are bullish that shopping will continue in this year as well.”
“Apart from the country’s robust economic growth, weakness in overseas markets due to European crisis, the Federal Reserve’s second quantitative easing plan and Indian government’s disinvestment (measures) added to the huge inflows. 2010 has broken all the records of investment by FIIs,” SMC Capital’s Jagannathan Thunuguntla said.
Analysts believe the government’s disinvestment in public sector companies, including Coal India, MOIL and Shipping Corporation of India, provided more investment opportunities to FIIs.
The foreign funds are quite bullish in equity stocks and have poured in Rs 1.1 lakh crore in the 2010-11 and infused Rs 36,317 crore in the debt market.
In January 2011, overseas investors had poured in Rs 5,363 crore in stocks and bonds, but the scenario changed in February, when they were net sellers of Rs 3,270 crore. However, in March they infused Rs 6,883 crore in the Indian market.
