The Hindu Business Line : FIIs inflows will slow down in 2005: Survey

WITH the dollar gaining in strength against major currencies and the hardening of US interest rates, India's top CEOs and CMDs feel that the crucial FII investment into the Indian stock market will slow down in the initial months of 2005, a survey by the Associated Chambers of Commerce and Industry (Assocham) has found.

Seventy eight per cent of the country's leading 200 CEOs and CMDs polled by the "Assocham Business Barometer (ABB)" are not sure whether the foreign institutional investors will remain positive on India and continue to pour money in 2005 the way they did in calendar 2004. The portfolio investment had touched $8.8 billion in 2004 not only giving a major boost to the Sensex but also triggering a debate whether there should be any cap on the FII inflow.

The CEOs surveyed are not willing to bet on FII in the wake of high volatility in the market place. A clear view from the survey was that the inflow to the emerging markets as a whole would slow down with investors again looking to the US.

The survey also found that while India Inc remained positive on an impressive industrial growth achieved in April-November period of the fiscal 2004-05, high oil prices were an area of concern for them. Forty-four per cent of the respondents feel that the rising crude oil price is seen as the biggest worrying factor in the months to follow and the pressure on interest rate is another cause of major concern for 26 per cent of those covered in the survey.

On agriculture growth, the survey pointed out that sustainability of robust industrial growth would largely depend on the agriculture sector in the current fiscal. This view emerged clearly with 84 per cent of the respondents stating that the farm sector was crucial to the industrial growth.

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