Fiis Pour $102.6m In Current Month, Sentiment Bullish

Foreign institutional investors (FIIs) have pumped in $102.6 m in the first fortnight of May. Brokers say that the sentiment remains to be bullish on India with the economy showing signs of improvement.

However, they feel that more money can flow in the market provided concrete steps are taken to tackle the macro issues like oil price hike, fiscal deficit, financial sector reforms and infrastructure.

According to figures released by the Sebi, FIIs purchased shares worth Rs 615.8 crore and sold shares for Rs 248.1 crore. The net FII investment stood at Rs 367.7 crore which is $102.6m in dollar terms.

 

An observation of the FII investment trend for the first five months of the year reveals that gross sales have been 60 per cent or more of gross purchases.

However, for the first fortnight of May, gross sales by FIIs were less than 40 per cent of the gross purchases. Brokers say that this is an indication of a positive sentiment prevailing abroad on India.

The sentiment among investors abroad is very bullish on India. This is primarily due to the healthy economic situation with interest rates remaining down, markets offering depth in good counters with a good liquidity. We feel that the pace of investment will continue in the short-term. The emphasis of FIIs seems to be on quality stocks. There is an activity in B group counters too, said Gul Tekchandani, chief investment officer, Sun F&C.

The FII gross purchases in January stood at Rs 1,301.1 crore and sales at Rs 981 crore, in February purchases at Rs 1062.6 crore and sales at Rs 744.4 crore, in March purchases were at Rs 1,694 crore and sales at Rs 1,014 crore, and in April purchases were at Rs 1,265 crore, while sales stood at Rs 732.6 crore.

However, sceptics feel that more money can flow in if the pace of reforms moves into top gear.

K R Bharat, director, CS First Boston, told Business Standard that the FII money that is pouring in the Indian market is much lower than what actually flows in other emerging markets.

There are investors abroad who are willing to put in money in the Indian capital market. However, the government has to take tough decisions to tackle the oil price hike and bring in more fiscal deficit. It has to bring in faster financial sector reforms by opening up the insurance sector, he said. FIIs made gross purchases during the year of securities worth Rs 5,938.5 crore and sales of Rs 3,720.2 crore with the net inflow standing at Rs 2,218 crore.