FII inflow races towards $ 13 bn mark

FII inflow races towards $ 13 bn mark
ENS ECONOMIC BUREAU

MUMBAI, FEB 21: Big bulls foreign institutional investors (FIIs) seem to have found India an attractive investment destination. With a huge FII inflow in the first two months of the new calender year, their cumulative investment in India is now racing towards a record $ 13 billion mark. It is currently at $12.91 billion.

According to the Securities and Exchange Board of India, FIIs have put in a substantial Rs 288.20 crore on February 16, 2001. On February 19, 2001, they withdrew a meagre Rs 2 crore. FIIs have been big buyers on the bourses in the first two months of the calender year 2001.

Unlike the bull rally last year when local investors were in the forefront and took Sensex to the 6150 level, FIIs were leading the bull charge in the new year. "Within a span of slightly over a month from the $ 12 billion mark reached in early January 2001, their cumulative inflow is leaping towards the $13 billion mark," said BSE dealer pawan Dharnidharka.

They have pumped in $299.40 million, or Rs 1,393.70 crore, in February 2001 on top of their huge investment of $914.10 million or Rs 4,273.30 crore in January 2001, taking their net inflow in 2001 to $ 1.21 billion or Rs 5,667 crore. "India is ranked seventh best in terms of foreign direct investment (FDI) inflow before countries like Italy, Spain and that itself is a positive sign as far as FII inflows are concerned," said an analyst.

However, a section of the market attributes the huge FII inflow as diversion of funds from developing markets to emerging markets while some others attribute it as their hedge on developing markets.

With the Union budget barely a week away, FII investments are believed to be primarily in Old Economy stocks. The Bombay Stock Exchange (BSE) Sensitive Index has gained a huge 860 points in the last four months, from a low of about 3,500 in mid-October 2000 to the current 4,350 level. The rally was led by old economy stocks like Reliance Industries (RIL), State Bank of India (SBI), Larsen & Toubro, cement and auto shares.

Analysts feel that the huge FII buying is yet to see its results, in terms of fundamentals, as far as Old Economy stocks are concerned. "The moment FII buying stops, these scrips decline," they said, adding, institutions are churning their portfolio in New as well as Old Economy stocks by booking profits at higher levels.

Infotech shares lead sell-off
Mumbai: Information technology (IT) and communication shares led a sell-off on Indian markets on Wednesday. The benchmark Sensex fell by 56.99 points to close at 4302.23 on the Bombay Stock Exchange (BSE) following sustained selling in the wake of the continued weakness at Nasdaq.

However, select cyclicals and index-based shares extended their overnight gains and partly cushioned the Sensex fall. IT and communication shares retreated further on heavy selling by investors following an overnight steep drop of over 107 points in the Nasdaq Composite Index due to downgrading of tech shares by analysts and a string of profit-warnings by some tech companies in the US, making a total fall of 234 points in the last two trading sessions.

Dealers said that investors, who had built long positions in IT and communication counters in the past on expectation of buying by foreign institutional investors (FIIs), started offloading their holdings as their hopes were belied due to sustained selling by FIIs. A bearish trend in South East Asian stock markets at close also partly depressed market sentiment.