FIIs turn big buyers after 7 months, invest $3.2bn in October

Foreign institutional investors (FIIs), who have been shying away from the Indian markets over the past few months due to a host of factors including concerns about poor earnings growth and the pace of economic reforms amidst a slowdown in China, have turned buyers yet again.

FIIs have made net investments of about $3.2 billion or `20,553 crore so far this month in equity and debt markets, the highest since March. They have made net investments of nearly $900 million or `5,814 crore in equity markets in October (till 26th), the highest since April, data showed.

Overseas investors have bought more than what they sold in the equity markets for ten consecutive trading sessions in October, data with share depository NSDL showed.

FIIs have made net investments in stock markets in all but two trading sessions during the month, data showed.

Foreign institutional investors started buying into Indian equities and fixed income securities after RBI's higher than expected rate cut and positive macro-economic numbers, market observers said. "A lot of money is flowing out of other emerging markets (EMs). It is being routed to India as Indian equities are being seen as relatively less risky compared to their EM peers," says Vikram Dhawan, director, Equentis Capital.

"India is better placed among emerging markets. The macro-economic situation is improving and there are signs of a turnaround in the industrial economy," says G Chokkalingam, founder and managing director, Equinomics Research and Advisory.

"India's structural weakness (of being a large importer of commodities) has become its strength now," Dhawan says.

Since commodity prices are likely to remain depressed for the next one year, India would continue stand to benefit making it an attractive investment destination, he says.