Marketmen say that new foreign funds have been aggressive buyers over the last couple of weeks, especially during the last two weeks of March and the first week of April.
This effectively means a fresh foreign inflow into the major bourses. Marketmen say that while existing players are focusing on restructuring their portfolios, it is the new fun ds that have been driving the market.
Among the new funds that have been aggressive in the market over the last couple of weeks include the Japanese fund Yazuda Trust, Prolefic, Abtrust and Picktet Investments.
Other existing funds which were reported to have been aggressive buyers include Morgan Fund, the government of Singapore, Oppenheimer Deutsche Morgan Grenfell, Genesis and Sun F&C. Schroedders and Capital International, too, were said to have pumped in fresh money in the last few weeks.
As per BSE figures, during the period from March 27 to April 10, FIIs have pumped in Rs 148 crore. Last week was a slight dampener with BSE figures indicating net sales of Rs 80 crore.
These funds are reported to have made purchases in stocks like Pentafour Software, MTNL, BSES, HPCL, Cochin Refineries, ICICI, Hindalco, Ashok Leyland, Wipro, Videocon International and Raymond Woolen. This apart, they are also said to have aggressively bought software stocks, sending many of them to dizzying heights.
One significant aspect of the rally is that even mid-cap stocks have posted handsome gains. Apart from fundamentally sound stocks, a lot of other mid-cap stocks, which had plunged to abysmal levels, have been able to recover some of their losses.This has given FIIs the ideal opportunity to recast their portfolios.
Another factor which has gone in Indias favour is the fact that the domestic markets still look attractive when compared with other South East Asian countries. Therefore, fund managers looking to invest in Asia would have to put a significant portion of their money into India, says a fund manager with a domestic institution. There has been a lot of balanced buying during the recent rally which has lent more depth to market even as indices have been consistently heading north. Earlier, most of the funds used to target key index stocks even at overheated levels. As a result, most of the gains during the earlier rallies used to be localised among few stocks. This time, funds are also going by valuations. There have been bulk purchases by funds in infrastructure stocks like steel, cement and heavy engineering.This has resulted in the gains trickling down to the second line of stocks, says the chief dealer at an FII brokerage.
Fidelity is reported to have bought a sizeable chunk of ICICI shares. The government of Singapore is reported to have made significant purchases at the LML counter while an unknown Japanese fund is reported to have picked up two lakh shares of Videocon International.
With the change in government, some of the new funds have taken a positive view on the economy. Most of the existing funds have preferred to maintain a cautious approach till policies of the new government become clear. Till that time, these funds are restructuring their portfolios by disposing dud stocks, and putting the money back into fundamentally sound stocks, said an FII source.
