New Delhi: Foreign Instituional Investors (FIIs) have emerged as net buyers in the Indian stock markets after a one year face-off, with net investment of Rs356 crore in the first four months of the year.
So far this year, FIIs have made a gross purchase of equities worth Rs1,21,245 crore and sold equities valued at Rs1,20,888 crore, resulting in net investment of Rs356 crore, as per the data available with the market regulator Sebi.
After pulling out a hefty Rs52,987 crore from the Indian stock markets in 2008, which saw the Bombay Stock Exchange benchmark Sensex plunging 51%, FIIs have turned net buyers at the end of Wednesday’s trade.
“Risk aversion has reduced and FIIs have started showing confidence in India. They know that the India growth story is intact and in long run the market is going to give better returns,” SMC Global Vice President Rajesh Jain said.
Analysts say strenghtening of Rupee against the US greenback in the last one month signals that the flow of foreign funds are coming back to the country.
Rupee, which had touched a high of Rs52 against the US dollar, has now appreciated and is hovering around Rs49 a dollar mark.
“The US dollar is getting weaker as the FIIs, sensing a turn around, are now focussing on the emerging economies as their investment destination,” Jain added.
The Sensex has gained over 18% so far this year to touch 11,403.25 points, the highest level in the past six months.
The BSE’s Sensex had scaled a high of 21,206.77 points in January last year, but dipped to a low of 7,697.39 points in October. It had closed the trade at 9,647.31 points in 2008.
Indicating a revival in the stock market, the flight of FIIs back to the Indian markets saw an infusion of Rs6,508 crore in the capital market in April alone, the highest monthly infusion so far this year.
“FIIs have turned out to be net investors mainly on the back of heavy buying in April. However, it is too early to predict for how long the trend would continue,” Kejriwal Research and Investment Services Head Arun Kejriwal said.
An analysis of the data of foreign investment showed that the confidence of FIIs in Indian equities has started to build in the month of March as they bought equities worth Rs530 crore.
However, the investment was significantly less, as compared to Rs6,681 crore sell-off by them in the first two months of 2009.
“The fund infusion by the FIIs into the equity segment, which started in March is likely to continue till August, as funds come with an investment horizon of six months,” he added.