FIIs are one of the most prime investors and the reason behind the stock market making new highs. In this article we are trying to figure out the trend on investment done by FIIs in the month of September 2009 .We will also find out the type of sectors that’s have been chosen by FIIs to do investment.
FIIs have made net investments of US$ 10 billion in the first six months (April to September) of 2009-10. Major portion of these investments have come through the primary market, more than through buying via secondary markets. Real estate, banking and finance, engineering and oil and gas are the prime sector where the FIIs investment. Almost three-fourths of the money has been invested by FIIs in these sectors. More important and interesting thing to notice is that these 4 sectors accounts for 71% of the total FII investment at US$ 4.55 billion during the quarter.

  •   Foreign Institutional Investors activity during September-2009

Net Purchase/Sale

  • Figures for this year 2009

Net Purchase/Sale
August-09 Rs.4,028.70
July-09 Rs.11,625.30

  • Figures of Corresponding year 2008 July-September

Net Purchase/Sale
September-08 -Rs.7,937.00

August-08 -Rs.2,065.80
July-08 -Rs.1,012.90

  • Figures of Corresponding year 2007 July-October

Net Purchase/Sale
October-07 Rs.15,577.60
September-07 Rs.18,948.50
August-07 -Rs.7,526.80
July-07 Rs.18,132.80
The data provided above is being analyzed to find the momentum and the timing when FII’s become attracted towards Indian market. In other words to find a pattern of FII’s investment.
FIIs in the month of September 2009 have pumped in Rs.18000 cr in Equity. We have find out that similar amount of Investment by FIIs in the year of 2007 .In July 2007,September 2007,and in October 2007.
If we filter more and go further in depths we find that in the whole of 2008 the FII’s did not do any investment equivalent of 2007 and 2009.
In 2009 we find the month of May when FII’s started making investment similar to 2007.
But this does not mean that FII’s will do the same investment in October 2009 in parallel to October 2009.We are figuring out the momentum behind such investment and figure out the trend. So it is when the FII’s are confident and bullish on the Economic fundamentals then only they do investment of around the figure done in 2007 and 2009. The fundamentals needs to be real one and not speculative. One interesting thing to notice is that from 1999 to 2009 we only find the Above two years when the FII’s are Fundamentally bullish.

The total FII market cap in 13 leading sectors was US$ 92.5 billion. The prime reason for such huge investment by FIIs in this month is driven by many positive news of Indian economy.
The few of the prime reasons that driven the FIIs to do such huge investment in September.
• The late revival of monsoon
• Upward revision of economic growth from 5.8 % to 6.1%
• Good Advance tax numbers.
• Better performance of companies in the 1st quarter ended-June 30
• Trade policy with an ambitious target of US$ 200 billion exports for 2010-11

Infrastructure and heavy engineering has also attracted FIIs to do investment, largely due to higher government spending and leveraged investment by companies in these sectors. In heavy engineering, FII market cap has gone up 202% and in steel, it was up 274% in the past six months. So huge growth of investment has made these sectors Indices to swell like anything. The FIIS are also increasing the investment in India’s Construction sector. FII investment in construction sector has grown by substantial 422% in the last six months.
If we compare among the BSE Indices with 52 weeks high and low ,we will find the Indices have swelled by an average of 3 to 4 times. Click the Link Below.Look at the 52 WEEK High and Low of the indices only.
We find that Auto,Bank, Oil and Gas indices jumped by 3 to 4 times.
In the Coming days we will find huge FIIS investment coming. The prime reason for this will be the NEW code that is prepared by SEBI. SEBI is giving finishing touches to a detailed concept paper that seeks to simplify and further relax the norms governing investment by foreign institutional investors (FIIs) in Indian equities. Moreover if the proposals goes through, individual foreign investors would be able to buy and sell securities on the Indian stock exchanges. These reasons are more than the Basic Principle that India remains a favored destination of FII’s doing investments.
As economic growth accelerates and tax compliance improves over the next few years, fiscal deficit will come under control. FII flows into India will continue to be strong.