FIIs continue to plump for the India story

ACCOUNT for 22% of total traded volumes in February

Foreign institutional investors (FII) have been net purchasers in the equity market in the current month.

Despite the positive FII inflows, the market has remained rangebound as domestic players have mostly stayed away or resorted to profit taking at higher levels, brokers said.

In fact, market entities add that FIIs have accounted for about 25 per cent of the total traded volumes on the bourses in January and 22 per cent in February so far. Notably, FIIs can only take delivery-based calls in the equity market.

FIIs bought Indian shares worth Rs 473 crore on Wednesday on top of the Rs 604 crore on Tuesday and Rs 834 crore purchases on Monday, bringing their total net investments to more than $1 billion (Rs 5,724.20 crore) in February so far, according to data on the Securities and Exchange Board of India website.

FIIs have been buyers on each of the 12 trading sessions in February so far. The number of registered FIIs has also gone up from 637 on December 31, 2004 to 665.

Falguni Nayar, co-head of Kotak Institutional Equities said, "Foreign institutional investors have been the major movers in 2004 on the Indian bourses and this is just the beginning of their love affair with India. Earlier the fund allocation towards India was relatively small, but this has now begun to change perceptibly. The increased appetite for Indian equities is backed not just by the strong macro story but also by attractive valuations and ever-improving financial performance by India Inc."

Vijay Saraf, chief operating officer at Centrum Securities said "Despite the FIIs being net buyers, there is a lack of activity in the overall market as players are looking for an impetus. The upcoming Union Budget may provide direction to the market."

Nayar added, "We expect the benchmark Sensex to be in the range of 5800-7200 over the next 12 months, and it could even overshoot that upper limit. Hence there is still a significant upside despite the Sensex being at its current levels and an opportunity to create wealth."

"What will give the domestic story a boost is the strong capex trends and consumption, while the global commodity cycle is expected to stay extended. We also expect the midcap rally to continue as companies attain scale. There is high expectation from the Union Budget, and positive measures could give the markets a big push," she added.