FII cumulative investments in stocks reach $125 bn during 2012

Dec 26 2012, 14:23 IST
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Foreign Institutional Investors (FIIs) purchased stocks worth about Rs 6.5 lakh crore in 2012. (Reuters) Foreign Institutional Investors (FIIs) purchased stocks worth about Rs 6.5 lakh crore in 2012. (Reuters)
SummaryForeign Institutional Investors (FIIs) purchased stocks worth about Rs 6.5 lakh crore in 2012.

of Rs 5.67 lakh crore (USD 125 billion) in shares and Rs 1.55 lakh crore (USD 32 billion) in the debt segment.

After a disastrous 2011, FIIs began 2012 on a positive note and infused more than Rs 36,000 crore in the first two months, as the Reserve Bank paused in rate hikes that improved liquidity position .

But foreign investors turned negative after government's anti-tax avoidance rule (GAAR) proposal announced early this year that led to continued outflow till June.

Market experts attributed the outflow to a host of factors including the GAAR proposal and ratings agency S&P's move to lower India's outlook to negative from stable, citing slow progress on its fiscal situation and deteriorating economic situation.

Overseas investors once again started pouring funds in the stock market in July and the pace of inflows increased in September after a slew of reforms initiated by the

government. These measures made it easier for foreign companies to invest in aviation, broadcast and retail companies.

According to investment banking major Morgan Stanley, FIIs have preferred bigger stocks as their aggregate holding in the country's top 75 companies rose to a six-year high level of 21.6 per cent in the July-September quarter.

Positive measures taken by the government also helped attract FIIs, which in turn helped the market benchmark Sensex soar by about 25 percent in 2012.

Asked about the new year, Bandhopadhyay said, "The situation seems to be more promising on the international front compared to the domestic. European market is stabilising and the global energy prices seems to be going in favour of countries which import oil including India."

"However, there are concerns on the domestic side-- economic growth has been now growing at sub six per cent for the last two-three quarters, inflation has been hovering

above seven per cent for quite a while and fiscal and current account deficit continue to be high.

"But we are still better off than other economies across the globe, which raises optimism of more FII flows into the country," he added.

As per Sebi data, the total number of registered FIIs dropped to 1,755 as on December 21, first decline in five years. This number has been rising continuously since the end of 2007, when there were a total of 1,219 registered FIIs in the country.

At the end of 2010, there were 1,718 registered FIIs, which came down to 1700 at the end of the previous year.

However, the number of

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