The Hindu Business Line : New FII registrations provide silver lining

It can, however, be inferred that the FIIs and sub-accounts, who have registered with SEBI in the last two and half months, could be waiting on the sidelines for the right entry point.

BL Research Bureau

Amid the gloom surrounding the equity markets in India currently, the rise in the number of new FII registrations, according to Securities and Exchange Board of India (SEBI) data, is a silver lining.

Since end October 2007, 190 FIIs and 470 sub-accounts have registered with the market regulator.

Ongoing correction

These figures are comforting since there were doubts in some quarters that after the imposition of the restrictions on issue of participatory notes, the external investors such as hedge funds, who were using the p-notes route for investing into India, would look elsewhere for investing their funds.

It may be recalled that SEBI banned the fresh issue of participatory notes (p-notes), with derivatives as underlying, and restricted the issue of p-notes in the cash segment.

Fresh registrations, however, imply that some of these investors are willing to invest in Indian equities through the front-door.

Around 90 FIIs and 300 sub-accounts have registered with SEBI since the beginning of this year.

It appears that they are not deterred by the ongoing correction and have a positive view of the long-term growth prospects about the country.

Entry point

This data is at loggerheads with the figures for net FII inflows in this year so far.

The external investors have been net sellers in cash to the tune of $3.2 billion.

It can, however, be inferred that the FIIs and sub-accounts, who have registered with SEBI in the last two and half months, could be waiting on the sidelines for the right entry point.

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