The Hindu Business Line : FIIs lie low in first 2 weeks of new year

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Chennai Jan 22 FIIs have taken a tepid approach towards Indian equity in the first two weeks of January. There have been net FII outflows to the tune of Rs 552 crore between January 1 and January 15.

A study of net FII inflows into India from 2001 onwards shows that inflows have always been positive in the January 1-15 period.

Even in a year like 2001, when the preceding year saw the great technology-led slide in stock markets, FIIs had taken an optimistic view in the beginning of the following year.

The cautious approach being taken by FIIs this time around can be attributed to two factors. The unrelenting bull run in the markets since 2003, which has led the Sensex to appreciate by 388 per cent, and the relatively stretched valuations of the markets could have been the reason behind FIIs slowing down on fresh investments and taking some profits off the table.

What is of greater concern is the fact that most of the other major Asian equity markets have had positive net inflows in the same period.

The Japanese markets have seen inflows aggregating $2,041.3 million. The Bank of Japan's decision not to hike interest rates in a bid to keep economic growth on track seems to have gone down well with FIIs, with the Nikkie Average scaling a nine-month high earlier last week.

Even the equity markets in Thailand recorded positive inflows in spite of the bomb blasts that rocked the country on New Year's Eve.

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