FII tap on, $117.9mn inflow on Thursday

FIIs' net investments soar to $8.58bn till Sept 22.

The Indian markets have won the foreign institutional investors' (FIIs) vote of confidence. Even as the Sensex plunged 266 points on Thursday, FIIs made a net investment of $117.9 million.

This was not an isolated incident. The cumulative net investment of $8.58 billion until September 22 this year surpassed investments of $8.52 billion made in the entire calendar year 2004.

This is FIIs' highest-ever investment in the Indian equity market in a year. In 2003, the net inflow was $6.59 billion and it was $751 million in 2004.

But in rupee terms, FIIs' net investment in the local market this year is yet to catch up with last year's inflow. This is because the rupee has strengthened against the dollar this year.

The average exchange rate this year has been 43.65 as against 45.30 of last year. FIIs have invested Rs 37,425 crore in the current calendar year till September 22 against Rs 38,965 crore last year.

A total of 150 new FIIs opened their offices in India in the first eight months of the current calendar year, up from 120 in 2004. In this month, 23 new FIIs have set up shops in India. In August, there were 25 new entrants.

"The flow will continue as the India story is still alive for the FIIs," said a foreign fund manager.

The FII trade turnover (buying and selling) in the first eight-and-a-half months of 2005 is Rs 3,55,737 crore. This is 7 per cent higher than the 2004 turnover of Rs 3,33,009 crore.

After being net sellers in April and May, FIIs have continuously been net purchasers since June, pumping in $5.26 billion. In the first three weeks of September, the net FII purchase has been worth $1.05 billion, according to data available with the Securities and Exchange Board of India (Sebi).

The largest-ever single-month inflow was recorded in February 2005, when they were net buyers of shares worth $1.91 billion. FIIs bought shares worth $1.23 billion in May, $1.22 billion in June, $1.82 billion in July and $1.16 billion in August. They were net sellers to the tune of $150 million in April and $261 million in May.