New Delhi: The role of foreign investors in the Indian capital market is gaining significant momentum as foreign stake in Indian companies has shown a sharp upturn in the quarter ended 30th September, which saw net inflows of $12 billion, reports PTI.
According to an analysis of BSE500 companies for the July-September quarter, the market share of foreign investors including foreign institutional investors (FIIs), American Depository Receipts (ADRs) and Global Depository Receipts (GDRs) has risen at the cost of domestic mutual funds.
For the September quarter, the market share of FIIs, ADRs and GDRs taken together in BSE500 has risen to 17.8%, while domestic mutual funds' percentage of the total pie has declined to 3.76%, even as the insurance share remained flat at 5.25%, Religare Capital Markets said in a recent report.
"Foreigners are pumping in money into Indian shores, because of the resilience of the Indian economy. Just after the crisis we have bounced back quite sharply, as against the developed economies," Ashika Brokers research head Paras Bothra said.
The capital inflow of a whopping $12.5 billion got reflected in the uptrend in the Bombay Stock Exchange benchmark index, Sensex, which jumped over 14% and on the foreign investor ownership, which rose to 17.8% from 16.6% over the April-June quarter.
Mr Bothra however added: "Indian policymakers need to understand that capital inflows are going to be very strong and they should judiciously manage capital inflows. The kind of liquidity flow that we are witnessing that is going to have an impact on our currency value."
The foreign investor ownership showed the highest quarterly rise in nearly three years after December 2007.
"The overall value of the FII portfolio also leaped 27% to $267 billion by September this year, as against $210 billion in June, and has now crossed its earlier peak of $264 billion in December 2007," the report added.
On the back of high foreign capital inflows, redemption pressures continued for domestic mutual funds and their overall market share in the BSE500 companies declined to 3.76%. The insurance share remained flat for the third consecutive quarter.
A sectorwise analysis shows that most of the foreign capital found its way into the financials sector, while telecom and consumer staples saw interest from domestic institutions.
Meanwhile, energy and IT stood out as an under-owned sector across all institutional investor groups.
Mr PV Subramanyam, a financial trainer and chartered accountant, engaged an enthusiastic audience on the basics of building wealth
Moneylife Foundation today held another interesting seminar, which was attended by a packed house at the Moneylife Knowledge Centre. PV Subramanyam, a chartered accountant by qualification and a financial trainer by profession, treated the participative audience to an enlightening discussion on the burning topic of building personal wealth.
Titled - 'It's not your income but your wealth that counts', Mr Subramanyam's presentation served as an eye-opener for the listeners. "We as a nation are scared of investing. The only thing we know is how to save. Too much money is lying in banks because of such laziness. This works perfectly well for the rich. The money in your bank account is lent out to the real estate developers, who jack up property prices and sell at ridiculous rates to you. To buy the property, you borrow from the bank at high interest costs supported by the government. This is like an unholy nexus between the banks, government and the builders."
Mr Subramanyam rightly pointed out that seeking wealth is different from seeking happiness. He pointed out that it is important to be content by what you already have and not by what you do not need. Delving into the basics of investing, he advised the audience to keep things as uncomplicated as possible and not to buy products which they do not understand. "To make money you do not need too many ideas. You need simple ideas and discipline. Start with a small amount. The size of the investment does not matter that much, but the time period does," said Mr Subramanyam.
He highlighted some basic mistakes investors make. Some of these are using the past to predict the future, blindly following advisors, media, authors and regulators, treating gold and real estate as wealth creators and our tendency to ignore small numbers. He also pointed out that some of the lies that are bandied around the financial marketplace - regulators protect interest of small investors, RBI sets interest rates, large cap stocks are less volatile, equities are risky and microfinance means cheap finance. Speaking about investing in equities, Mr Subramanyam said, "Equities are the only option for those who want to earn decent returns over and above the impact of inflation. Equities may be risky in the short run, but debt products are risky over the long run. Be prepared for a long innings in your life by staying invested in equity and not touching it."
He advised the audience to follow a goal-oriented strategy to building wealth, advising to invest in equity, take term insurance and put some money in a SIP of an index fund. "Writing down your goals is of immense help. You will know exactly at what speed you need to travel to get where you want", he said.
Mr Subramanyam has served in the financial services industry for over two decades - in equity broking and mutual funds industry, corporate finance advisory and personal finance planning. He has been involved in training fund houses, life insurance companies, private sector banks, brokerage houses, and many companies, helping people save better, invest better, equipping people with the tools to get richer. He writes regularly for publications and websites and his opinion is solicited by TV channels on personal finance programmes.
Mr Subramanyam recently wrote a book on wealth creation titled "Retire Rich Invest Rs40 a Day". So far, it has sold upwards of 43,000 copies.