The $700 billion bailout package is expected to bring some stability to the striving US financial sector and is expected to put some brake on the outflow of foreign institutional investors (FIIs) in short-term.
The FIIs hold almost 15 per cent of the tradable equity in the Indian stock market and the net outflow of the FIIs since January 1, 2008 from the Indian equity market has been to the tune of Rs 81,999 crore.
“The bailout package may bring some relief to the current financial turmoil and bring some stability in stock markets globally. This should slowdown the outward movement of FIIs for few days,” said a equity head of a leading foreign brokerage firm.
Experts, however, believe that the long-term effect will depend on the effectiveness of the bail out package on the financial system.
“The outflow should slowdown over the next few days but going forward it will depend on the effectiveness of the bail out package in the revival of the financial system,” said a senior official with a leading FII.