| Thus, despite concerns about the new government which came to power in mid-May and the subsequent crash on May 17, the markets have rebounded smartly. |
| It may be recalled that around that time India's weightage in the Morgan Stanley Capital International Asia Pacific model portfolio was reduced to 2.9 percent from 5.9 per cent. |
| For the year to August 2004, India has been the third best performer after Indonesia and Phillipines scoring a return of 22.3 per cent while the MSCI Asia Pacific-ex Japan index saw a return of 14.8 per cent. |
| However, in the past one month, the Indian markets have not done so well with the Korean and Taiwanese markets posting better returns. Investors in China have ended up poorer with that market showing negative returns for the year as well as the quarter under consideration. |
| Interestingly, while foreign institutional investors (FIIs) picked up stocks worth $935 million (Rs 4,304 crore) in the three months to August 2004, domestic mutual funds were net sellers to the tune of about Rs 800 crore. |
| During the year to August, FIIs bought shares amounting to around $11 billion or Rs 50,382 crore), while the domestic mutual funds bought stocks worth Rs 1,390 crore. |
| In the past one month or so, flows into Korea and Taiwan have been larger compared with India, driven by the relative undervaluation of those markets, even though the real rate of interest is now negative across emerging markets. |
| According to market watchers, FIIs are waiting to see how interest rates and inflation move in India and also to get a better sense of how the rupee is likely to behave. |
| At the current valuation of around 12 P/E for FY05 for the market as a whole and even higher P/Es for specific stocks, fund managers do not see exceptional value. |
| Thus the Sensex has seen a marginal fall of 0.2 per cent in August and its return between January and August 2004, too remains a negative 12.2 per cent. |
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