The Hindu Business Line : FIIs may look for stability

FOREIGN institutional investors (FIIs) and foreign broking firms have said they do not see the possibility of large withdrawals of foreign money from the equity market even if Congress with the Left parties forms the Government.

They said the huge withdrawal of funds by FIIs in the last one-week was mainly due to the uncertainties over a hung Parliament and the fall in global markets.

"Everybody in the market wants stability of Government and continuity of reform process and if Congress can provide both, FIIs will not leave Indian market," said Mr Vineet Bhatnagar, CEO, Refco-Sify Securities.

FIIs have been net sellers in the last seven trading sessions and have withdrawn funds to the tune of Rs 1,518.6 crore from the equity market this month. FIIs have been net buyers in the equity market for several months.

Mr Bhatnagar said heavy selling by FIIs last week was mainly due to the fears of a hung Parliament and not whether NDA or Congress forms the Government.

Dealers at foreign broking firms that cater to several FIIs said last week's selling was mainly by hedge funds and after the outcome of elections they will come back.

"Hedge funds are short-term traders and in case of any uncertainty they pull out very fast. There is possibility that they may come back once the new Government is formed as the fundamentals of Indian economy and companies have not changed," said an official of a FII, which has several hedge funds as clients.

Mr Arup Raha, Head of Research at JP Morgan Securities said: "As on today it is very difficult to say about the FIIs' views, but if there is stable Government that is in favour of reforms, then they are not going to sell out."

Mr Bhatnagar said the sharp pullback in the market (after down by over 200 points) today is an indicator that FIIs like stability rather than which party forms the Government.

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