FIIs likely to play it safe till Budget announced: Experts

Having infused a net amount of Rs 277 crore in stocks and bonds so far this month, overseas investors are likely to remain largely on the sidelines till the Union Budget is presented on February 28.

Having infused a net amount of Rs 277 crore in stocks and bonds so far this month, overseas investors are likely to remain largely on the sidelines till the Union Budget is presented on February 28.

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"Foreign investors are waiting for Budget clarity, like how the government is going to react to fiscal deficit, borrowing and infrastructure," CNI Research CMD Kishor P Ostwal said.

Over the 13 trading sessions in February so far, foreign institutional investors (FIIs) invested Rs 277 crore on Indian stocks and bonds. In dollar terms, FIIs invested $ 60.98 million during the period, data released by market regulator Securities and Exchange Board of India (SEBI) reveals.

There will be no major FII buying activity in the market till the Union Budget on February 28, Ostwal said.

Overseas investors have been gross sellers of equities worth Rs 2,091.40 crore so far this month, but were bullish about the debt market, making a net investment of Rs 2,368.80 crore.

While Ostwal said FIIs do not appear to have been worried about various scams that have been unearthed in recent times, some other analysts said that governance issues could have impacted their confidence in the Indian market.

"Foreign investors' confidence have definitely taken a hit because of governance issue, interest rates. Share prices have fallen in recent times and the market will remain under pressure," SMC Global Equity Head Jagannadham Thunuguntla said.

The Bombay Stock Exchange benchmark Sensex has fallen by around 10 per cent to the 18,000 points level during the course of the trading sessions held in 2011 so far. In 2010, the index rose by 13 per cent on the back of foreign inflows amounting to over Rs 1.75 lakh crore, a record.

In January, overseas investors were gross buyers of equities worth Rs 79,420 crore, but sold shares worth Rs 72,910 crore, translating into a net investment of Rs 6,509.60 crore, as per SEBI data.

In 2010, foreign investors bought stocks and bonds valued at nearly Rs 10 lakh crore, a record for a single year. At the same time, FIIs sold shares and bonds worth Rs 7,80,000 crore during the year —- which implied a record net investment of over Rs 1.75 lakh crore for the year.

In dollar terms, net FII inflows stood at about $ 39 billion in 2010. In 2009, they had infused Rs 83,423 crore into the stock market.