FIIs have turned net buyers of equity since March 22.

Foreign Institutional Investors have been going to town recently about how they are underweight on India and how crude oil prices, raw material costs, food inflation and the Budget deficit would result in portfolios being reallocated elsewhere across Asia.

A Citi group report dated March 28 said that investor sentiment is now more negative than average. A Credit Suisse honcho has gone on record saying that India is their largest underweight market with FII outflow and inflation being the biggest concerns.

Beginning February, prominent FII players such as HSBC, BoFA Merrill Lynch and RBS, had emphasised that inflation and political uncertainty on policy issues were only short-term in nature and that the long-term India growth story was intact.

There is no data to suggest that the above-mentioned players were net-buyers, but as a class the FIIs have been net buyers since March 23.

“If you ask the FIIs, they will promptly reply that that there is a Chinese wall between their research and trading desks,” said the CEO of a mutual fund. “And they would also educate the masses that underweight does not mean sell, it just means that a stock is either not being bought or the volume of buying has gone down,” he added.

Experts point out that there is no law in India that regulates analyst opinion and therein lies the loophole. The analysts' communication is crafted so well that there are enough gaps to exploit and also to save their skin in case it backfires.

“In the US, no analyst can change his opinion within six months and if such a change is warranted due to events such as a drastic policy change, he has to file the reasons to the SEC (US stocks regulator),” said Mr Kishor Ostwal, CMD, CNI Research.

As a result, there is no safety net for the retail investor. There continue to remain question marks on what is said and what is actually done, said market experts.

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