FIIs skip equities, shift focus to debt market in 2011

So far this year, FIIs have made a net investment of Rs13,798.50 crore in the debt market, whereas they have withdrawn Rs1,901.80 crore from the equities market

Foreign institutional investors (FIIs) are curtailing their investments in the equities market and are instead shifting their focus to the debt market where they have pumped in as much as Rs13,798.50 crore so far this year, reports PTI.

FIIs are giving equities a skip, owing to factors such as the impending slowdown in domestic economic growth, rising inflation and the high interest rate regime prevailing in the country, say experts.

Commenting on this trend, Ashika Stock Broking’s research head (Equities) Paras Bothra said, “This is a natural shift from FIIs or any other class of investor. With interest rates remaining astronomically high, portfolio allocation to debt market is raised up in the overall composition of the asset allocation structure.”

FIIs have so far this year made a net investment of Rs13,798.50 crore in the debt market, whereas they have withdrawn Rs1,901.80 crore from the equities market so far this year, according to information available on market regulator SEBI’s website.

“Oil/inflation and international bad news are at centre-stage and FIIs keep pulling out and putting in money in accordance with the news flow. It happens in any market,” said Abhinav Dwivedi, founder-president, Progressive Financial Ventures.

Mr Dwivedi added that the shift towards debt is not permanent. In a downtrend, offloading equities is normal.

The Sensex, has dived 9.78% from its peak of 20,509.09 points in January this year and 12.74% from its all-time high of 21,206.77, scaled on 10 January 2008.

Going forward, FII flows are likely to remain moderate to weak because of the natural tendencies of the equity market as an asset class becoming unfavourable with high interest rate regime, Mr Bothra said, adding that the recent political and corporate problems have also kept FIIs on tenterhooks.

Meanwhile, the number of FIIs registered with SEBI has marginally declined from 1,718 as on 31 December 2010 to 1,716 as on 31 May 2011. The number of registered sub-accounts has however increased from 5,503 in 31 December 2010 to 5,833 sub-accounts as on 31 May 2011.

FII inflows so far this year are in contrast to last year’s trend, when robust inflows helped the Indian stock markets sustain momentum, even when the global economy continued to reel under pressure.

In 2010, foreign investors had purchased stocks and bonds worth about Rs10 lakh crore, a record high for a year and nearly one-fifth of their overall investment so far.


Adani Group firm completes acquisition of Abbot Point Port in Australia for Rs9,000 crore

The management team from Adani is in place and has taken over ownership and oversight of the operations of the port effective from today

Adani Group firm Mundra Port and Special Economic Zone today said that it has completed the acquisition of Abbot Point Port in Australia for 1.8 billion Australian dollars (Rs9,000 crore).

The name of the company has been changed to ‘Adani Abbot Point Terminal Pty Ltd’, an official statement said, reports PTI.

The management team from Mundra is in place and has taken over ownership and oversight of the operations effective from 1st June. The company’s nominated directors have come on the board of the target company, the statement said.

Mundra Port announced on 3rd May that it had signed a Sale and Purchase Agreement in respect of the Abbot Point X 50 Coal Terminal (APCT) following the international competitive bidding process conducted by the state of Queensland in Australia.

Queensland is selling the coal export terminal as part of a 15 billion Australian dollars asset sale programme. It will use the money for reconstruction following the devastation caused by floods and a cyclone in the region.

The port has two mechanised berths. MPSEZ aims to build another two in the next five years. It has a capacity of 50 million tonnes (MT). It is using 20MT at present.

Adani plans to fund the deal through debt and the sale of some equity in MPSEZ.

The company expects revenues from port operations to nearly triple to 305 million Australian dollars (Rs1,470 crore) by 2016 from 110 million Australian dollars (Rs530 crore) in 2011.


Godrej Consumer Products buys 51% stake in Africa's Darling Group

Darling Group, which operates in 14 countries, will also provide a platform for Godrej to introduce its home care products in the region

New Delhi: FMCG player Godrej Consumer Products (GCPL) today said it has acquired 51% stake in African hair care company Darling Group Holdings for an undisclosed amount.

Darling Group Holdings operates in 14 countries across Africa, selling hair extension products under brand names like ‘Darling’ and ‘Amigos’, PTI reports.

“The Darling Group enables us to take our presence in Africa to the next level...We believe that the strong share positions that the group brands enjoy will further accelerate our trajectory of sustainable profitable growth in the region,” Adi Godrej, chairman of GCPL, said.

The company said the acquisition will help it scale up operations in the region and strengthen its position in the hair care market.

GCPL sells hair colours in more than 14 sub-Saharan African countries under the ‘Inecto’ brand. The acquisition will provide a platform to introduce Godrej home care and personal care products in the region.

The Godrej Consumer Products stock slipped on the announcement, then regained ground and was trading at Rs416.50 at about 1pm on the Bombay Stock Exchange, down 0.24% from its previous close.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)