FIIs stage comeback in August

Foreign institutional investors (FIIs), which pulled out over $1.63 billion from Indian equity markets in May, seem to be making a comeback.

India has attracted more foreign money compared to other emerging markets such as South Korea, Taiwan, Indonesia, Thailand, and Philippines in the last fortnight.

In the cash segment alone, FIIs have pumped in $220.90 million in the first eight trading sessions in August. This almost equals the net FII investment in July "" $ 252.20 million. In June, the net FII investment was less than half of that figure "" $ 105.70 million.

According to a recent Goldman Sachs report, India attracted the bulk of the $1 billion of investments made by FIIs in emerging markets in the last week of July, showing that "foreign appetite has finally returned to India."

While the Indian equity markets received $930 million ($206 million in cash and $724 million in the futures and options segment) worth of FII inflow during the period, Taiwan received just $37.5 million.

Indonesia ($49 million), Thailand ($32 million), and Philippines ($12 million) also received much lower inflows compared to India.

Fund managers said India was back on the FIIs' radar screen as the combination of a sharp correction in stock prices and strong first-quarter earnings of corporations had made the domestic markets attractive.

"FIIs are finding the Indian markets attractive mainly because the fall (in prices) happened too quickly. In terms of the price to earnings ratio too, the markets look fairly priced, considering that the growth rates are higher," said Andrew Holland, head of the strategic risk group of DSP-Merrill Lynch.