FIIs back to play on Dalal Street

Mirroring the changed outlook for Indian equities, foreign institutional investors (FIIs) have enhanced their grip by increasing their stakes in 157 companies in the January-March quarter. Companies which saw FIIs significantly raising their stakes include Onmobile Global (9.31% stake rise), followed by Uttam Galva Steels (8.82%), IVRCL Infra (5.51%), Maruti Suzuki (4.97%), GMR Industries (4.48%), Austral Coke (3.95%), Nelco (3.8%), IRB Infra (3.32%), Balasore Alloys (3.28%), AmtekAuto (3.25%). Others such as Mindtree (3.01%), Grasim (2.54%), Hero Honda (2.33%) and Unitech (2.28%) also witnessed FII hike their holdings in the three months of last fiscal, according to CMIE data. Also, FIIs have pumped in Rs 4,328 crore in the capital markets so far in April, the highest monthly infusion this year. They have made a gross purchase of equities worth Rs 32,499 crore in April, while they sold shares valuing Rs 28,170 crore, resulting in a net investment of Rs 4,328 crore, according to data available with the Sebi. Marketmen said the inflow of foreign funds into domestic equity market will continue in the near term as the global economic situation seems to be somewhat stabilising. "FIIs would continue investing in the Indian market till they hear some bad news from their home market. As of now the economy there is somewhat stabilising and FIIs would continue their investments here in India," SMC Global V-P Rajesh Jain said. "What will matter most towards the end of 2009-10 will be the outlook for 2010-11, when we expect the economy to grow 8% and corporate earnings to increase close to trend levels of 10-12%. We doubt if this has been priced in, and believe the markets may be pleasantly surprised towards the end of 2009," an HSBC economist said. In early April, Goldman Sachs raised India's stock rating to 'market weight', the first upgrade, since it was rated 'underweight' in January 2008. "We are raising our long-standing underweight stance on India to market weight, because we believe that India's investment merits relative to other regional alternatives have improved," a Goldman Sachs analyst said. FIIs have pumped in more than Rs 4,000 crore into the stock markets in the last 13 trading days of the new fiscal. FIIs are particularly buying now when pessimism is maximum as they expect to reap benefits when the economy gains strength later, marketmen added. However, the foreign investors shed their stakes in 463 out the 869 firms (that FII exposure at the end of October-December 2008 quarter) with stocks across sectors getting offloaded in the January-March quarter. While FIIs reduced holdings in scam-tainted Satyam by 29.15%, others such as Ansal Housing (-17.91%), MALCO (-11.2%), ICSA (-8.46%), Patni Computers (-8.38%), Indian Overseas Bank (-8.22%), Financial Technologies (-7.85%), Aban Offshore (-7.64%), Gateway Distriparks (-7.01%), NIIT (-6.78%), S Kumars Nationwide (-6.45%), Bharat Bijlee (-6.12%) and Pyramid Saimira (-5.94%) were amongst the prominent names which figured on the list where the investors pared stakes.