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New Delhi: Betting big on the Indian equity markets, foreign fund houses have invested over Rs71,000 crore ($15.6 billion) so far this year and analysts believe that it will soon breach the record-figure achieved in 2009, reports PTI.
In the last fortnight alone (1st-17th September), foreign institutional investors have made a net buy of whopping Rs12,442 crore ($2.67 billion) in the Indian stock market, as per the data available with market regulator Securities and Exchange Board of India (SEBI).
Stock brokers are optimist about the Indian growth story and believe that soon the FII investment in stock markets will cross the last year's record level.
Last year, Indian stock market attracted record inflows of Rs83,400 crore, a period when the Sensex recorded a gain of nearly 80%.
As per the SEBI data, so far in current year, FIIs have made a net investment of Rs71,824.50 crore in local stocks, while their exposure in debt instrument stands at Rs42,124.5 crore ($9.1 billion).
The low interest rate regime followed in many advanced economies to avert the recession, coupled with better economic performance of emerging markets such as India and China, are keys to attract a chunk of foreign inflows, analysts said.
"FIIs continue to pour money into Indian financial assets amid bright prospects for economic growth and corporate earnings," India Infoline Ltd vice president (research) Amar Ambani said.
"The market is sustaining the rally as inflows from FIIs is coming in relentlessly and in coming days too, this rising spree is likely to continue," Geojit BNP Paribas research head Alex Mathews said.
On the back of huge inflows from FIIs, Sensex had been on a rising-spree in recent sessions. It regained the 19,500-mark this month after a struggle of 32 months.
With such huge inflows from FIIs, marketmen believe the Sensex could reach its record high-level of 21,200 easily in coming period. The Sensex had hit its lifetime high of 21,206 as on 10 January, 2008.
At present, the 30-share benchmark of the Bombay Stock Exchange is already trading at its highest level since 17 January, 2008.
In the week gone by, the index recorded a gain of 4.2% and ended at 19,594.75 — its best close since January 17, 2008. This weekly gain of 4.2% was the best gain in a week so far in 2010.
If the trend remains the same then we can see the index touching its record level very soon," a broker said.
FIIs play a significant role in domestic equity markets and their movement (inflow and outflow) causes fluctuation in benchmark indices.
After pouring in Rs83,000 crore in local markets, these investors began exiting in early 2010 and in January they were net sellers of Rs500 crore.
But from February, the scenario started changing and they were net buyers of Rs1,216 crore. In April, FIIs were net purchasers of shares worth Rs9,361 crore, after pumping in Rs19,928 crore in March.
In June and July, FIIs made a total net investment of Rs27,125 crore.
Maintaining their bullish stance for the third month in a row, global fund houses made a net investment of Rs11,685 crore ($2.5 billion) in Indian equities in August.