Brokers see $4 bn more coming in 2 months

India ranks No. 21 among emerging markets in Morgan stanley capital international returns league this year.

Portfolio investments into the Indian equity markets are set to increase and brokers are expecting between $3 to $4 billion in net inflows in the next two months.

Brokers have based these estimates on discussions with the foreign institutional investor (FII) clients.

Srinivasan Vardarajan, managing director and head of markets in India, J P Morgan Chase Bank, said, "India is one of the fastest growing economies in the Asia Pacific region and I am sure that the dollar inflows will sustain."

He said that the figures being talked about in the markets look "reasonable".

Sources in FII brokerages said that there has been a sudden surge in foreign inflows in the last one month largely due to the rupee starting to appreciate against the dollar again.

A stronger rupee increases the dollar-denominated returns for foreign investors, "That is a very major driver," said Krishnamurthy Vijayan, chief executive officer of JM Mutual Fund.

The impact cost of investing in India is also lower than in the case of the other emerging markets.

On Wednesday the rupee posted a new seven-month closing high of Rs 44.45/46 to the dollar, surging 0.42 percent on the back of robust foreign capital and trade flows.

The rupee had last finished higher at 44.4100/4200 on April 29. The rupee has now appreciated 1.4 per cent in the five days since last Wednesday and has gained 2.6 per cent in calendar 2004.

A dealer at a FII brokerage said, "It is the end of the (calendar) year and most foreign institutions will be re-drawing their asset allocations. The indications are that the asset locations will be in favour of the Asian markets, including India." Brokerage sources added that India could expect to get a substantial chunk out of this allocation.

Foreign institutional investors have pumped in over $7.2 billion into the equity markets in the current calendar year.

In November 2004 alone, foreign institutional investor inflows have been close to $1.6 billion, the second highest in a month so far since April 2004 when the inflows were close to $1.7 billion.

India No. 21 among emerging markets in MSCI returns

The strong rally in the Indian equity markets in the last three months has just taken the benchmark indices to levels in the first fortnight of January 2004.

As a consequence, India ranks at number 21 among the 29 emerging markets tracked by Morgan Stanley Capital International (MSCI), based on returns in the current calendar year to date.

According to data posted on the MSCI website, the Emerging Markets Standard India index has posted gains of 6.05 per cent in the current calendar year to date.

The MSCI Egypt index tops the returns league with mind boggling returns of 97.74 per cent in the current year.

Egypt is closely followed by Colombia with returns of 95.76 percent in 2004 to date, and Hungary with returns of 57.25 per cent.

However, six Asian indices are among the ten worst performing indices. The MSCI Standard Pakistan index posted returns of 3.64 per cent, Korea was barely 2.74 per cent up this year and China 1.16 per cent.

However, the MSCI Taiwan index actually slipped 5.30 percent and Thailand index has fallen 8.34 per cent in the current calendar year to date.

However, based on returns in the last quarter till date, India stands at number 7 among the emerging markets, with returns of 12.49 per cent.

The MSCI Jordan index tops the charts of quarterly returns at 28.09 per cent, followed by the MSCI index of Israel (non domestic) stocks at 23.20 per cent.