BackFII investment in stocks falls to 3-year low in FY12
FII investment in stocks falls to 3-year low in FY12
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Mumbai: The net investment by foreign institutional investors (FIIs) in stock market during 2011-12 was the lowest in the last three years at ₹ 47,935 crore.
FIIs made a net investment of ₹ 47,935 crore in the equity market during the fiscal ended 31 March 2012, which was way below the figure of ₹ 1.1 lakh crore in 2010-11 and ₹ 96,857 crore during 2009-10, according to the SEBI data.
Fears of a global economic slowdown and domestic troubles with inflation, interest rates, lack of reforms and the falling rupee all collaborated to make the foreign investors cautious in 2011-12, experts said.
Destimoney Securities’ Managing Director and CEO Sudip Bandyopadhyay said, “Eurozone worries have pushed the Indian market into risk aversion mode and other emerging countries are performing better than India, so FIIs are staying away from our market."
However, the January-March period of the fiscal saw robust inflows. Out of the total net investment of ₹ 47,935 crore, ₹ 43,951 crore came during the last quarter of FY12.
Market analysts attributed strong FII inflows in January-March to signs of a reversal in the Reserve Bank of India’s (RBI) monetary policy and the subsequent impact of improved liquidity position.
They expect the positive trend to continue further, given that the liquidity conditions remain strong.
“FIIs have been infusing money into the Indian market due to change in RBI’s monetary policy that has added liquidity to the system. This liquidity will help in growth of the country," Wellindia executive director Hemant Mamtani said.
“Indian market will continue to witness inflows in the whole year, if the liquidity conditions remain strong," he added.
During the past fiscal, foreign fund houses infused ₹ 49,053 in the debt market this takes the collective net investments by FIIs in the stocks and bonds to ₹ 93,725 crore.
Experts also said that outflow was seen in most of the sectors, but interest rate sensitive segments like auto, banking and realty were among the worst hit.
FIIs, the main drivers of the markets, turned negative on equity here last fiscal. The stock market barometer Sensex has plunged 2,041 points or 10% in the fiscal 2011-12. The index finished at 17,404.20 points on 30 March.
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