The Hindu Business Line : FIIs inflow crosses $1 b in seven trading sessions

“FIIs continued their late March buying into April, pointing to early signs of increasing risk appetite,” said an HSBC-Private Banking report of May. “India is set to have a mild slowdown in comparison to a recessionary global environment and with risk appetite returning, India should remain a preferred destination for global fund flows.”

But many fund managers are of the view that it is the election results that will be the big deciding factor for continued long-term FII investment.

The contitunity of the inflow would depend on the formation and stability of the new Government, said Mr Anil Advani, Head of Research, SBICAP Securities.

Mr Pankaj Tibrewal, fund manager with Principal Pnb AMC, said: “The early indications which we have been getting are that a lot of money from emerging market funds, which includes India-dedicated funds, is sitting on the sidelines and waiting for the political scenario to unfold.”

An expected, 6 per cent GDP growth is also a factor that might pull FIIs into Indian markets, said Mr Advani.

In May, FIIs have bought Rs 19,296 crore worth of shares and have sold close to Rs 14,258 crore worth of equity. In April, they had bought equity for Rs 39,653 crore, and sold for Rs 33,145 crore.

Even with huge buying activity on FII counters, some fund managers are of the view that one should not read too much into this phenomenon.

Other emerging markets also witnessed sharp inflows during the last two weeks, said Mr Tibrewal.

With India having a substantial weightage in the emerging markets indices, it has seen proportionately substantial inflows, explained a fund manager.

India has a weight of 6.31 per cent in the MSCI Emerging Markets Index.

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