FII INFLOWS HIT
RECORD $25 BN
FII investment in India has grown to
$25bn since the early nineties. Sebi data reveals that cumulative
net inflows stand at a record $25.04bn or Rs 1,03,854 crore
as on March 15, '04 . It is estimated that the market value
of this holding is close to $30bn or 13.5% of the equities
listed.
Analysts call Indian equities reasonably
priced, in comparison to their peers in Asia and other emerging
markets. However, they also believe that as inflows have surged,
India has becomes vulnerable to an overall trend in the global
equity markets.
So far in '04, net FII inflows stand at $2.1bn. By the end
of this month, the tally is likely to rise to $3.1bn due to
subscription to the Oil and Natural Gas and Gas Authority
offer for sale. This is despite the fact that India was among
the worst performing markets in the first two and half months
of '04.
While the MSCI Emerging Markets index
rose 4.8%, MSCI India fell 6.3%. After Thailand and Peru ,
India is the worst performing market in the global emerging
markets category. But while these are small markets, large
markets like Taiwan and South Korea have witnessed a significant
surge. The MSCI Taiwan rose 9.7% while MSCI Korea gained 8.4%
in '04.
The $2.1bn this year follows inflows of
$6.7bn in '03 which made India the third biggest recipient
of net FII inflows after Taiwan and South Korea .
A fund manager at a leading US-based mutual fund pointed out
that the sentiment in global equities is not positive. However,
emerging markets as a category, continues to attract investor
attention.
There is also talk of Taiwan and South Korea being categorised
as developed markets. This is likely to improve investment
prospects for India as its weightage may surge going forward.
"In the immediate future, the inclusion
of ONGC in benchmark indices is a definite possibility. This
will raise the overall India weightage," the fund manager
added.
