India story retains charm as newer FIIs join the queue

Investors from across the globe are making a beeline to buy Indian stocks. Recently, the central bank of Norway, Norges Bank, got registered with the Securities and Exchange Board of India (Sebi) as an FII (foreign institutional investor). The list doesn't end here.

FIIs from Australia, Austria, Canada, Denmark, Ireland, Italy, Sweden and Taiwan are now looking at investing in India.

Fund managers said, "The appetite for Indian equities is rising globally and more and more funds from non-traditional countries are either registering themselves with the capital markets regulator or investing in India-dedicated funds abroad."

On the flip side, according to data available, the proportion of new FIIs registering with Sebi from traditional markets such as the US, UK and Europe is on the decline.

From as high as 80 per cent in 2003, the FIIs registration from traditional countries went down to less than 75 per cent in 2004 and further slipped to 50 per cent in the first six months of 2005.

Funds such as Aviva Gestion D'actifs, Government of the Province of Alberta, Frank Russell Investment Co Plc, Asia Debt Recovery Co Ltd, Rolls-Royce Pension Fund, California Public Employees' Retirement System, Darta Investment Funds Plc, Los Angeles City Employees' Retirement System, BDT Invest Funds Plc, Non-Teacher School Employee Retirement System of Missouri, Ohio Police and Fire Pension Fund and Public School Retirement System of Missouri are the few among a large number of funds that have recently registered with Sebi.

The number of FIIs registered with Sebi stands at 726 as against 639 in January 2005.

Explaining the recent trend, a head of equity with a foreign broking firm said, "Interest in Indian equities has spread to non-traditional countries such as continental Europe, Japan and Australia. India is one of the fastest growing economy among its Asian peers and global investors do not want to miss the strong growth opportunity."

Narayan S A, managing director, Kotak Securities, said, "The rising number of FII registration suggests that there is a growing demand for Indian equities from overseas investors. The robust trading system and a simplified tax regime has also induced foreign investors to directly register with Sebi."

Andrew Holland, chief administrative officer and executive vice-president-research, DSP Merill Lynch, said, "Since early January, nearly 350-400 global investors have attended various investors conference, of which, 50 per cent investors were first timers exploring opportunity here.

New funds are aggressively looking at opportunities in various growth-oriented sectors. The government recently relaxed foreign direct investment norms in areas such as retail, real estate, mining and textile providing new opportunities."

An equity dealer from a domestic firm said, "With liquidity coming from domestic institutional investors in the last few months, a lot of these newly registered FIIs have started buying into Indian equities. The FIIs have been a dominant force in equity markets in the last two years.

After pumping in over $8.5 billion last year, in the current financial year, they have pumped over $3.5 billion.