"Though the political and economic outlook is undoubtedly gloomy, the foreign institutional investors (FIIs), for their own sake, would pump in more money into the stock markets in the first two weeks of December," said a leading broker at the BSE. December is the financial year-ending month for most foreign institutional investors.
"FIIs, like their domestic counterparts, are keen to show a healthy balance sheet at the end of the year. With the present lacklustre sentiment, most of the FII funds having an Indian exposure have a low net asset value (NAV)
now," he said.
Another leading broker concurred with this view and said the foreign institutional investors are likely to pump in funds during the first three weeks of December to improve their funds' NAV. "This will be done primarily at their own behest and if the market falls prior to this, then buying in Sensex scrips could be an attractive investment proposition," he said.
However, there is a consensus among the marketmen that some of the leadingFIIs will not wait for a formal allocation of funds, which is normally done during January-February. "Instead, these FIIs are likely to take positions in the stocks beforehand and wait for the markets to revive with the allocation of more funds for the Indian markets," said a senior dealer.
According to market analysts, the domestic stock markets could witness a net outflow in foreign investments.
"This is natural as far as global investment norms are concerned. Some of the major FIIs have already downgraded India as an investment destination, and the fallout (in terms of net negative investments) is not be unexpected," said an analyst at a leading brokerage.
However, senior FII representatives in the country are of the opinion that the downgradation is only "temporary
