Foreign institutional investors (FIIs) are back and have pumped Rs. 9,000 crore in the Indian capital market in September so far. But industry trackers say they may book profits in the coming months, stabilising the Sensex.
“There is liquidity in the international market due to the recent announcement by the European Central Bank to buy back bonds,” said Sunil Jain, vice-president, equity research, Nirmal Bang. “Combined with the recent announcement on domestic front, the Indian capital markets have been giving best returns in last one month.”
The benchmark Sensex of the Bombay Stock Exchange had jumped by more than 20% in the calendar year, surpassing every other major Asian counterpart in the same period.On Monday the Sensex was down marginally by 0.4%, or 80 points, to close at 18,673 points. However, on Monday alone the net investment of FIIs in the Indian equity markets stood at Rs. 2,471.9 crore.
The FII inflows in the Indian equity market has touched Rs. 72,215 crore in the calendar year. Industry experts say that FIIs could have more exposure to Indian equity in the coming months, depending on the steps government takes on the reforms.
Brokers were also buoyant on the public sector banks and expect a rally in these stocks.
According to Emkay, the public sector banks can see an appreciation by around 15-20% jump in the stock prices.
“Foreign investors are preferring more exposure on their portfolio after the recent reforms by the government. Also the concerns surrounding the sluggishness of the economy combined with the high interest rates have gone down,” said Alex Mathew, research head, BNP Paribas.
Industry trackers say that the Indian currency could appreciate to as much as 49 against the US dollar due to FII inflows from Rs. 53.47 against the greenback.