The Hindu Business Line : FII inflows cross $10b in 2005

THE investments by FIIs in the Indian equity markets have crossed $10 billion in the 2005 calendar, the highest ever by the foreign funds in a single year after FIIs were allowed to make portfolio investments in the country's stock markets in the early 90s.

As per SEBI figures, FIIs made net purchase of $587.3 million on Friday, taking the total net investments in the 2005 calendar to $10.11 billion.

The FIIs also made record purchase of $1.458 billion in the first 16 days of December, compared to last month's figure of $902 million.

The net FII investments stood at $8.518 billion in the 2004 calendar, $6.594 billion in 2003, $740.30 million in 2002, and $2.843 billion in 2001, according to SEBI data.

"I'm not surprised (that the net FII inflows crossed $10 billion)," said Mr Andrew Holland, Executive Vice-President, DSP Merrill Lynch.

Public issue helps: A main contributing factor was the series of "decent" issuances, including the ICICI Bank, where foreign funds have made investments, he added.

Mr Holland also said that 2006 would easily witness another $5 billion net investments, excluding the investments into the new issues.

Taking into consideration the proposed high-profile issuances from Reliance Infocomm and Indian Airlines, which are expected to hit the market next year, the net FIIs inflows in 2006 would easily be $7-8 billion, he added.

Funds from Asian FIIs: Another key factor is the heavy inflows from new markets such as Japan, West Asia and Australia, analysts said.

Merrill Lynch alone raised about $700 million from Japan recently for investments into the Indian equity markets.

According to analysts, the fresh allocation for the FIIs for 2006 would be bigger than this year.

"The FIIs are waiting for the year-end numbers. Surely, these will be bigger than the 2005 figures," said an official in a local brokerage.

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