'CY05 FII inflows to cross CY04 level'

FII inflows will be higher this calendar year than the over $8 billion recorded in 2004, according to Srinivasan Varadarajan, director of J P Morgan Securities (India).

"India will continue to be attractive for capital inflows in 2005. Chances are that FIIs will remain invested," Varadarajan said.

"While many think that more than $8 billion of portfolio investment last year was quite large, I believe capital inflows this year will be quite surprising."

The currency movement in the country would be dictated by capital flows, he added.

Though the official line at J P Morgan Securities is that the rupee will start depreciating towards 2005-end, Varadarajan said his assessment was that the Indian currency would appreciate throughout the year.

Arvind Virmani, director and chief executive of Indian Council for Research on International Economic Relations, said improved productivity of the Indian economy, which has not been reflected in data yet, would put pressure on the rupee to appreciate.

Surjit Bhalla, MD of Oxus Investments, also said there would be pressure on the rupee to appreciate.