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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.

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