Local investors swim with dollar tide

FII inflows may cross last year's level of $10.7bn.

Fund managers do not see any dent in the India story. Given the strong fundamentals, there is optimism that foreign fund flows may even exceed last year's level of $10.7 billion.

Says Devesh Kumar, equities head, ICICI Securities, "Fund flows could be 15-20 per cent higher this year."

Besides, domestic liquidity is also expected to be far higher this year. Observes Dominic Price, senior country officer at JP Morgan, "It is not simply foreign money that is waiting to come into the Indian market. There is nearly $1.75 billion which has been raised by local mutual funds that must also find its way into stocks."

The Dalal Street believes that local investors are now more convinced about the India story and are likely to participate in greater numbers this year.

Points out Andrew Holland, executive vice-president, DSP Merrill Lynch: "The markets may not have to depend entirely on FII inflows any more. Domestic flows into the market can double this year. India is likely to go the Korean way where the market appreciated 40 per cent last year despite FIIs being net sellers."

Big broker Rakesh Jhunjhunwala believes that there is no bubble in the market as yet. However, he advises investors to be cautious.

According to Anup Maheshwari, CIO, HSBC AMC, investors need to temper their expectations, given that the markets are no longer cheap vis-a-vis other markets Says Maheshwari, "Given the sharp rise in the markets over the past year, there can be volatility in the near-term and investors need to put in money from a medium to long-term perspective."

Kumar of ICICI Securities believes that the market will consolidate between 9,000-11,000 levels, after which it will move towards the 12,000 mark by the end of the year.