Business Economics & Services Team (BEST)
FIIs Flow Declines-Alternatives For Indian Markets
With the possibility of interest rates firming up in the US, the FII inflows into the country is likely to hit. This may sound not so good for the buoyant capital market in the country, which has been hitting new highs these days. Forewarning of that trend is noticeable these days. There is a downward movement in the FII flows into the country. For instance, overseas investors pumped in a little over Rs 2100 crore in the equity markets in December 2014, the lowest in the last 10 months.
Analysts are not taking this trend as serious since they believe that drop in net FII exposure in the equity market is on account of profit booking. They argue that the market will move up once the profit booking is completed in the next few days..
A look at the investment flows into the markets is important. FIIs have made an investment Rs 98150 crore in equities and their invest in the debt market was Rs 1.6 lakh taking the total investment to Rs 2.58 akh crore. The net investment in the debt market for the same period was Rs 11,856 crore, making it higher than that of investment in the equity market.
Whether it is good or bad, stock market has emerged as an important barometer for measuring the buoyancy of the economy. Assuming that there will be marked drop in the FIIs exposure in the market in the near future, some steps should be taken to sustain the trend.Before the advent of the FIIs into the country, capital market was sustained by retail investors and institutions. LIC, IDBI, IFCI etc had large exposure in the market. This trend has to come back to shore up the capital market.
The other important thing is to shore up the confidence of retial investors, who are shying away from the market because of the stock market crashes, which have been happening at regular intervals. SEBI, the watch dog of the capital market has been taking strict measures to curb malpractices in the market such as insider trading. But retail investors are not enthused in the market because of the legacy od bad expereinces that they had. It is time that we start a slow process of disintermediation between Indian markets and the FIIs. That does not mean that FIIs investments are not welcome. What it means that we have to have an alternate support system to sustain the market in occasions when FII inflows slow down. .
FIIs Flow Declines-Alternatives For Indian Markets
With the possibility of interest rates firming up in the US, the FII inflows into the country is likely to hit. This may sound not so good for the buoyant capital market in the country, which has been hitting new highs these days. Forewarning of that trend is noticeable these days. There is a downward movement in the FII flows into the country. For instance, overseas investors pumped in a little over Rs 2100 crore in the equity markets in December 2014, the lowest in the last 10 months.
Analysts are not taking this trend as serious since they believe that drop in net FII exposure in the equity market is on account of profit booking. They argue that the market will move up once the profit booking is completed in the next few days..
A look at the investment flows into the markets is important. FIIs have made an investment Rs 98150 crore in equities and their invest in the debt market was Rs 1.6 lakh taking the total investment to Rs 2.58 akh crore. The net investment in the debt market for the same period was Rs 11,856 crore, making it higher than that of investment in the equity market.
Whether it is good or bad, stock market has emerged as an important barometer for measuring the buoyancy of the economy. Assuming that there will be marked drop in the FIIs exposure in the market in the near future, some steps should be taken to sustain the trend.Before the advent of the FIIs into the country, capital market was sustained by retail investors and institutions. LIC, IDBI, IFCI etc had large exposure in the market. This trend has to come back to shore up the capital market.
The other important thing is to shore up the confidence of retial investors, who are shying away from the market because of the stock market crashes, which have been happening at regular intervals. SEBI, the watch dog of the capital market has been taking strict measures to curb malpractices in the market such as insider trading. But retail investors are not enthused in the market because of the legacy od bad expereinces that they had. It is time that we start a slow process of disintermediation between Indian markets and the FIIs. That does not mean that FIIs investments are not welcome. What it means that we have to have an alternate support system to sustain the market in occasions when FII inflows slow down. .
