All work, no play for FIIs this Christmas

Foreign institutional investors have already pumped in over $800 million this month.

It promises to be a busy Christmas for the securities, money and foreign exchange markets this year.

Normally, foreign institutional investors (FIIs) take a breather in December and the stock market sees a precipitous fall in activity. This December, the FIIs are working overtime.

They have already pumped in over $800 million this month and the net FII investment for calendar year 2005 is inching towards the $10-billion mark. The BSE Sensex has risen by 586 points this month so far.

Hectic buying by FIIs in the stock market has shattered the myth that these investors book profits towards the end of the year and return in the new year when they make fresh asset allocations for different markets in the world, including India.

Actually, FIIs can book profit at any opportune moment of the year. There is no redemption pressure by their investors at the end of the year.

The money market, too, is on an overdrive. With an outflow of over Rs 33,000 crore worth of India millennium deposits set to happen in the last week of December, dealers in debt instruments are on their toes as a tightness in liquidity can push the yield on government securities upwards. Overnight call money rates, too, can become costlier.

For forex dealers too, it is all work and no play this Christmas. They are staying away from their annual winter quiz, thanks to the unusual volume and volatility in the foreign exchange market.

The rupee has been on a rollercoaster ride this month. The Indian unit lost substantially in the first week of December vis-à-vis the dollar and crossed the 46 level to close at 46.11 on December 12.