With FY 09 turning out to be a year of significant FII outflows, it is estimated that domestic invesors may invest $21-billion during the year, a top research-house head said.
Domestic mutual funds have invested $1.5-billion in equities, while foreign institutional investors (FIIs) have been net sellers in Indian equities to the extent of $6.1-billion in FY 09.
"The underexposure of domestic investors to equities is set to change as cash-rich domestic mutual funds have invested $1.5-billion in equities in FY 09 till date. This is the fourth consecutive year of positive inflows by domestic mutual funds. The positive feature of this trend is that the inflows have continued despite a sharp and continuous decline in equities," Motilal Oswal's Head of Research, Rajat Rajgarhia, told reporters here today.
FIIs have been net sellers in Indian equities to the extent of $6.1-billion in FY 09 till date.
This outflow is on back of a record inflow of $12.7-billion in FY 08. This could be the first year of outflows from FIIs ever since they started investing in India, Rajgarhia said.
Private insurance companies have emerged as the biggest marginal investors in Indian equities. After investing $7.8-billion in FY 08, they have already invested $6.4- billion in H1 FY 09.
"We expect investments by private insurance companies to remain strong, although some slowdown cannot be ruled out," Rajgarhia said.