Business Daily from THE HINDU group of publications
Tuesday, Aug 22, 2006
Business Daily from THE HINDU group of publications Tuesday, Aug 22, 2006 |
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Stock Markets Markets - Outlook Namrata Gada
Mumbai , Aug. 21 FIIs and mutual funds continue to maintain a positive outlook on the markets, even though the amount of redemption continues to be higher than the amount invested in the markets post-crash. As per SEBI data, till May 11, 2006 FIIs had invested Rs 22,243.3 crore in the Indian markets. When the markets crashed, they redeemed to the tune of Rs 10,641.50 crore by the end of June. "Since the crash in May this year, there has been a perceived risk in investing, but emerging markets, particularly India, are picking up. FIIs, therefore, have started investing in Indian markets again but they are trading cautiously," said Mr Andrew Holland, Head (Strategic Research Group), DSP Merrill Lynch. The markets took a positive turn in July, with FIIs turning net buyers. The investment from July till August 18 has been Rs 4,403.7 crore, but this is far less than the huge redemptions that took place. "The recovery has happened, albeit not fully. There is still an amount of around Rs 6,000 crore which has been lost during the crash," said an analyst. The current total investment for the entire year by FIIs amounts to Rs 16,005 crore. "The weakness of the dollar against the Indian currency and the stabilisation of interest rate cycles in the US have played positive for FIIs. But they held back slightly," said Mr Jayant Pai, Vice-President (Institutional Equities), Parag Parikh Financial Advisory Services Ltd. Mutual fund managers said that the "mature" response by investors has helped them stay in equity markets as net buyers. In spite of the redemptions in June and July - collectively to the tune of Rs 2,058.66 crore - the funds have been net buyers for Rs 9,264.68 crore since April. "Investors have behaved maturely during the fall in the markets and have stayed invested," said Mr Naval Bir Kumar, Managing Director of Standard Chartered Asset Management Company Pvt Ltd. "We have always asked investors not to let short-term factors affect their sentiments, as the markets are poised to perform exceedingly well in the long term." However, mutual funds still see money markets and debt instruments as more lucrative, as the figures indicate. They have been net buyers to the tune of Rs 26,736.31 crore in debt from April to August (till date).
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