FIIs take back 44000 crores from Indian Capital Markets

Foreign Institutional Investors pulled out more than $7.5 billion from Indian debt and equity put together in the month of June 2013. The withdraw has been the highest from Indian capital markets in a single month ever, thanks to our dilapidated current account deficit and currency. Since April 2013 the Indian currency depreciated more than 10% in 2 months thereby erasing all the benefits of interest rate arbitrage that existed between U.S. and India. 

Investors in U.S. borrow in their home country at less than 2% and invest in Indian govt. and corporate debts at over 8% thereby yielding huge return. But since the overseas investors are borrowing in USD and investing in INR the depreciation in the invested currency beyond the arbitrage points makes it unattractive and worthless for them to stay invested. Similar is the situation for overseas equity investors, as they benchmark their return in their home currency, the depreciation in invested currency negated all the equity returns of April and May this year, which led to significant outflow from Indian stock markets as well.

FII Inflow Data in India since 1993: Debt and Equity

Since the Indian economy was liberalized in 1991 and Foreign institutional investors were allowed to participate in Indian Stock Markets, flood of money has come to Indian equities and debt instruments since then. Though it remained a bit sluggish in initial years but has picked up pace since 2004 when we received around 40000 crores from FIIs. 

In 20 year period between FY-1993 and FY-2013 we had only two years FY-1999 and FY-2008 when FII were net sellers and taken money out. FY-2013 witnessed record inflows of 140000 crores or $26 billion USD which is more than the inflows of first 10 years put together. 

Indian Equities got $4 billion of FII inflows in Jan 2013

FIIs continue to pump money into Indian Stock Markets on the back of improving domestic outlook and expected interest rate cuts in current year. They purchased shares worth Rs 77,859 crore, while they sold equities amounting to Rs 55,800 crore translating into a net inflow of Rs 22,059 crore ($4.05 billion), according to Sebi data. 

This was the seventh straight quarter of net investment by FIIs in the Indian equities market starting July, 2012. In 2012, FIIs had made net investment of Rs 1.28 lakh crore ($24.4 billion) in Indian equities, making it the second best year for the market after a record inflow of Rs 1.33 lakh crore ($29 billion) in 2010.

FIIs bullish while DIIs continue to sell

FIIs continue to pump in money into Indian equities and have been aggressive buyers on 14th Sep rally while DII's continue to remain bearish and have been a net seller of the strong rally of around 450 points on sensex. 

Foreign institutional investors (FIIs) were net buyers of Rs 2,833.72 crore in cash market while Domestic institutional investors (DIIs) were net sellers of Rs 688 crore in the cash segment. 

FII have so far poured in huge amount of money into indian equities to the tune of around 65000 crores in 2012.

FII Investment Inflows in India: Year wise data

Indian Stock Markets have been highly dependent on FII money and the market performance is usually directly proportional to the FII inflows and outflows. 

FIIs have invested over Rs 63,000 crore till august 2012, their highest ever investment in the first eight months and the benchmark BSE Sensex is up around 12%. In spite of highest ever inflows the markets couldn't perform that well, thanks to the Domestic Institutional Investors(DIIs) who have been net sellers during the year facing higher redemption. 

However with abundant liquidity situation worldwide, there is increased probability of India receiving more inflows in coming months. If you have been looking for the FII inflows in India till date, above is the snapshot of year wise inflow of FII money into Indian Capital Market and the corresponding effect on the benchmark index Sensex.

FII Investments in India crosses $7 billion till Feb 2012

Foreign Institutional Investors (FIIs) have so far invested more than $7 billion in Indian Stock Markets till Feb 2012. More than $5 billion were pumped in the month of February alone. This is the highest monthly net investment by FIIs in equities since October 2010, where they had infused Rs 28,563 crore.

Market analysts attributed strong FII inflows to signs of an easing monetary policy and the subsequent impact of improved liquidity position. Analysts expects the positive trend to continue further, given that the liquidity conditions remain strong. Strong surge in FII inflows in 2012 so far has helped boost the equity markets which has jumped nearly 15% since January, as also the rupee.

Sensex, Nifty gained for seventh straight week

Key benchmark indices gained for the seventh straight week to scale highest closing level in 28 weeks as latest government data showed that inflation in January eased to a 26-month low. Nifty continues to form higher highs throughout the week and finally closed above 5550 levels. 

Foreign institutional investors (FIIs) pumped in another 3500 crores during last week taking total for 2012 to 24,100 crores (till February), as per provisional data from the stock exchanges. The BSE benchmark Sensex was up by 540.70 points or 3.05% for the week to settle at 18289.35 levels. The NSE flagship Nifty ended at 5564.30 levels, up by 182.70 points or 3.40%. 

Stocks with high FII holdings in India - 2011

Companies with high FII holdings suggest strong fundamentals of the company but on the same time suggest high risk for investors as well. In turbulent times foreign institutional investors sell stocks and pull out money faster than the domestic institutional investors, as result of which the stocks with high FII holdings falls the most.

HDFC, Jain Irrigation, United Spirits, IVRCL, Indiabulls Real Estate are some of the stocks where FII holding is 50 percent or more. Barring HDFC most of these stocks are down more than 50% from their 52 week high.

Following is the list of stocks in India where FII's are holding more than one third of the company shares as of september 2011. 

FII outflow continue to put pressure on Indian Markets

Foreign institutional investors were again the net sellers of Rs 1,440.55 crore in Indian stock markets today, after selling stocks worth Rs. 758 crore on Wednesday (24th August). Benchmark index SENSEX ended 150 points down in todays trade.

So far this month the FIIs have sold stocks worth more than $2 billion in Indian markets.

Related Post:

Indian Markets Dances to the tune of FIIs.

Indian Stock Markets dances to the tune of FIIs

Foreign institutional investors (FIIs) were again net sellers of Rs 407.68 crore (provisional) today, according to data released by BSE. FIIs were net sellers of Rs 210.20 crore on Tuesday, August 16, according to data released by Sebi today. There are a total of 1,740 foreign funds registered with Sebi.

So far this month the FIIs have sold close to $1.5 Billion (INR 6800 crores) and the benchmark index SENSEX is down over 7%. The fall has been severe in select madcaps where due to low liquidity the stocks could not sustain the selling pressures and are down in the range 20 to 50%. FSL, one of the largest pure play BPO company of India is down close to 35% in August. Similarly a Mumbai based midcap real estate company HDIL is down close to 30%. Similarly there are many midcap stocks where the fall has been far more than the index fall due to significant FII selling.

Indian Stock market showing initial signs of weakness

Indian stock markets have started showing some weaknesses on the back drop of FII outflow. Both SENSEX and NIFTY are down close to 2% in early trades today. The reason seems to be obvious. The rupee has depriciated by 2% in last 3 days and the SENSEX and NIFTY are down almost 4 % from the recent peak. So all in all there is a loss of 6% for FIIs in dollar terms. Since in short to medium term the direction of rupee seems to be downward, they might be worrying about further losses on currency side and that is why taking some money of the table before the majority of the gains get wiped out.

But this correction is healty as Mutual funds and Retail Investors have been out from the market and were waiting for corrections to get in. One should not panic by the volatile movement of the SENSEX and NIFTY and stay calm. A 5% correction from the current levels of 20000 SENSEX should provide good entry point for investors. However one should still follow bottom up approach of stock selection and buy where the business outlook is good and valuation is reasonable.