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FIIs

FIIs

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Categories:Types, Research
Published by: Jaishal on Jul 06, 2009
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02/03/2011

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 1
www.ghallabhansali.com
Ghalla Bhansali Stock Brokers Pvt. Ltd.
22
nd
Ma 2009
Gold
 
WWWHHHYYY????????? 
FFF
IIIIIISSSSSSHHHOOOWWWEEERRRIIINNNGGGDDDOOOLLLLLLAAARRRSSSOOONNN 
IIINNNDDDIIIAAA 
FDI growth up 85% in '08, highest globally
India
 
achieved
 
a
 
stunning
 
85.1%
 
increase
 
in
 
foreign
 
direct
 
investment
 
flows
 
in
 
2008,
 
the
 
highest
 
increase
 
across
 
all
 
countries,
 
even
 
as
 
global
 
flows
 
declined
 
 by
 
14.5%,
 
says
 
the
 
findings
 
of
 
the
 
Unctad
 
study
 
 
Assessing
 
the
 
impact
 
of
 
the
 
current
 
financial
 
and
 
economic
 
crisis
 
on
 
global
 
FDI
 
flows.
 
The
 
study,
 
which
 
updates
 
the
 
organisation’s
 
 January
 
assessment,
 
estimates
 
that
 
the
 
FDI
 
investments
 
into
 
India
 
went
 
up
 
from
 
$25.1
 
 billion
 
in
 
2007
 
to
 
$
 
46.5
 
 billion
 
in
 
2008
 
even
 
as
 
global
 
flows
 
declined
 
from
 
$1.9
 
trillion
 
to
 
$1.7
 
trillion
 
during
 
the
 
period.
 
It
 
also
 
cautions
 
of
 
a
 
further
 
decrease
 
in
 
FDI
 
flows
 
in
 
2009
 
as
 
the
 
full
 
consequences
 
of
 
the
 
crisis
 
on
 
transnational
 
corporations’
 
(TNCs)
 
investment
 
expenditures
 
continues
 
to
 
unfold
 
Surprisingly
 
FDI
 
increased
 
 by
 
a
 
much
 
slower
 
10%
 
in
 
China,
 
pushing
 
up
 
the
 
inflows
 
from
 
$83.5
 
 billion
 
in
 
2007
 
to
 
$
 
92.4
 
 billion
 
in
 
2008.
 
What
 
is,
 
however,
 
significant
 
is
 
that
 
India’s
 
FDI
 
flows
 
which
 
was
 
 just
 
a
 
fraction
 
of
 
that
 
of
 
China
 
 just
 
a
 
few
 
years
 
 back
 
has
 
now
 
touched
 
half
 
the
 
levels.
 
More
 
importantly
 
that
 
ratio
 
of
 
FDI
 
to
 
GDP
 
in
 
India
 
would
 
now
 
exceed
 
that
 
of
 
China,
 
indicating
 
its
 
larger
 
role
 
in
 
the
 
Indian
 
economy,
 
as
 
the
 
size
 
of
 
the
 
Chinese
 
economy
 
is
 
around
 
three
 
times
 
higher
 
than
 
that
 
of
 
India.
 
India’s
 
achievement
 
in
 
mobilising
 
FDI
 
is
 
all
 
the
 
more
 
significant
 
 because
 
the
 
inflows
 
into
 
the
 
developed
 
countries
 
have
 
declined
 
 by
 
25.3%
 
in
 
2008.
 
In
 
contrast
 
the
 
overall
 
FDI
 
flows
 
to
 
developing
 
countries
 
increased
 
 by
 
7.2%
 
in
 
2008.
 
The
 
report
 
warns
 
that
 
though
 
developing
 
and
 
transition
 
economies
 
were
 
quite
 
resilient
 
in
 
2008,
 
during
 
the
 
downturn
 
in
 
global
 
foreign
 
direct
 
investment
 
(FDI)
 
flows,
 
they
 
will
 
 be
 
increasingly
 
affected
 
in
 
2009
 
as
 
international
 
investment
 
continues
 
to
 
decline.
 
However
 
it
 
also
 
noted
 
that
 
some
 
large
 
emerging
 
economies,
 
such
 
as
 
Brazil,
 
China
 
and
 
India,
 
still
 
remain
 
favourable
 
locations
 
for
 
FDI,
 
particularly
 
market
seeking
 
FDI.
 
They
 
maintained
 
relatively
 
high
 
economic
 
growth
 
rates
 
in
 
2008
 
compared
 
with
 
advanced
 
economies.
 
As
 
prospects
 
continue
 
to
 
deteriorate
 
more
 
markedly
 
in
 
developed
 
countries,
 
investors
 
are
 
likely
 
to
 
favour
 
the
 
relatively
 
more
 
profitable
 
options
 
available
 
in
 
the
 
developing
 
world.
 
Mahesh Babaria
maheshb@ghallabhansali.com 
Mittal Dharod
mittald@ghallabhansali.com 
 
 2
www.ghallabhansali.com
Ghalla Bhansali Stock Brokers Pvt. Ltd.
22
nd
Ma 2009
Gold
 
WWWHHHYYY????????? 
FFF
IIIIIISSSSSSHHHOOOWWWEEERRRIIINNNGGGDDDOOOLLLLLLAAARRRSSSOOONNN 
IIINNNDDDIIIAAA 
FIIs Coming Back
India
ʹ
s
 
exceptional
 
growth
 
story
 
and
 
its
 
 booming
 
economy
 
have
 
made
 
the
 
country
 
a
 
favorite
 
destination
 
with
 
foreign
 
institutional
 
investors
 
(FIIs).
 
It
 
has
 
continued
 
to
 
attract
 
investment
 
despite
 
the
 
Satyam
 
non
governance
 
issue
 
and
 
the
 
global
 
economic
 
contagion
 
impact
 
on
 
Indian
 
markets.
 
The
 
markets
 
have
 
given
 
a
 
resounding
 
thumbs
 
up
 
to
 
the
 
strengthened
 
mandate
 
given
 
to
 
the
 
Congress
 
party
 
and
 
Dr
 
Manmohan
 
Singh.
 
Equity
 
markets
 
were
 
up
 
17
 
per
 
cent
 
on
 
Monday
 
and
 
then
 
kept
 
their
 
gains
 
the
 
following
 
day,
 
with
 
record
 
volumes
 
driven
 
 by
 
a
 
 billion
 
dollars
 
of
 
FII
 
 buying.
 
FIIs
 
have
 
 been
 
net
 
sellers
 
of
 
equity
 
since
 
May
 
2008.
 
In
 
the
 
seven
 
months
 
till
 
November,
 
they
 
repatriated
 
Rs.43,000
 
crores.
 
There
 
was
 
a
 
pause
 
in
 
December
 
and
 
it
 
looked
 
as
 
if
 
the
 
FIIs
 
were
 
 back
 
in
 
the
 
market
 
to
 
 buy.
 
But
 
a
 
setback
 
came
 
with
 
Satyam
 
scam
 
which
 
prompted
 
them
 
to
 
sell
 
again.
 
In
 
the
 
year
 
2008
09
 
there
 
was
 
a
 
net
 
disinvestment
 
of
 
Rs.73,000
 
crores
 
and
 
FIIs’
 
share
 
in
 
market
 
capitalization
 
dropped
 
to
 
12
 
per
 
cent
 
from
 
15
 
per
 
cent
 
at
 
the
 
end
 
of
 
March
 
2008.
 
Since
 
last
 
March
 
there
 
has,
 
however,
 
 been
 
a
 
change
 
which
 
signals
 
that
 
FIIs
 
may
 
once
 
again
 
come
 
 back
 
to
 
roost.
 
There
 
are
 
reasons.
 
The
 
financial
 
crisis
 
in
 
US
 
and
 
EU
 
has
 
eased.
 
The
 
stress
 
test
 
carried
 
out
 
 by
 
Federal
 
Reserve
 
of
 
19
 
major
 
 banks
 
in
 
the
 
US
 
surprisingly
 
revealed
 
that
 
most
 
 banks
 
had
 
capital
 
in
 
excess
 
of
 
the
 
regulatory
 
requirements.
 
That,
 
along
 
with
 
encouraging
 
 balance
 
sheets
 
 brought
 
out
 
 by
 
Goldman
 
Sachs
 
and
 
Citibank,
 
has
 
revived
 
public
 
confidence
 
in
 
the
 
 banking
 
system.
 
Though
 
the
 
financial
 
crisis
 
has
 
eased
 
recession
 
in
 
US
 
and
 
EU
 
continues
 
and
 
may
 
even
 
deepen
 
further.
 
It
 
is
 
unlikely;
 
however,
 
that
 
recession
 
will
 
 be
 
prolonged,
 
as
 
in
 
the
 
1990s
 
in
 
 Japan,
 
 because
 
of
 
the
 
instant
 
action
 
taken
 
 by
 
the
 
central
 
 banks
 
and
 
governments
 
in
 
US
 
and
 
EU.
 
In
 
any
 
case,
 
recession
 
 becomes
 
a
 
compulsion
 
for
 
investors
 
to
 
look
 
for
 
countries
 
in
 
which
 
growth
 
is
 
positive.
 
That
 
is
 
true
 
only
 
of
 
a
 
few
 
countries
 
like
 
India
 
and
 
China.
 
Surely,
 
GDP
 
growth
 
in
 
India
 
has
 
come
 
down
 
due
 
to
 
the
 
exposure
 
to
 
world
 
recession.
 
But,
 
when
 
US
 
GDP
 
is
 
shrinking
 
at
 
3
4
 
per
 
cent,
 
India’s
 
GDP
 
is
 
rising
 
at
 
5
6
 
per
 
cent.
 
Besides,
 
the
 
P/E
 
ratios
 
for
 
most
 
of
 
the
 
companies
 
in
 
India
 
are
 
low
 
which
 
indicates
 
vast
 
scope
 
for
 
the
 
market
 
to
 
climb
 
up.
 
Stock
 
market
 
is
 
not
 
the
 
only
 
investment
 
target
 
for
 
the
 
FIIs.
 
They
 
seem
 
to
 
 be
 
even
 
more
 
interested
 
in
 
debt
 
mainly
 
 because
 
of
 
the
 
immense
 
opportunities
 
for
 
interest
 
arbitrage.
 
The
 
interest
 
on
 
G
secs
 
in
 
India
 
is
 
6
7
 
per
 
cent
 
when
 
it
 
is
 
less
 
than
 
1
 
per
 
cent
 
in
 
the
 
US.
 
More
 
than
 
that,
 
investment
 
in
 
corporate
 
 bonds
 
with
 
AAA
 
rating
 
is
 
about
 
600
 
 basis
 
points
 
higher
 
than
 
the
 
interest
 
on
 
G
secs.
 
No
 
wonder
 
FII
 
investment
 
in
 
corporate
 
 bonds
 
is
 
increasing
 
faster
 
than
 
investment
 
in
 
equity.
 
 
 3
www.ghallabhansali.com
Ghalla Bhansali Stock Brokers Pvt. Ltd.
22
nd
Ma 2009
Gold
 
WWWHHHYYY????????? 
FFF
IIIIIISSSSSSHHHOOOWWWEEERRRIIINNNGGGDDDOOOLLLLLLAAARRRSSSOOONNN 
IIINNNDDDIIIAAA 
Some Investment Highlights
 
The
 
Indian
 
growth
 
story
 
has
 
continued
 
despite
 
the
 
Satyam
 
non
governance
 
issue
 
and
 
the
 
global
 
economic
 
slowdown.
 
It
 
has
 
attracted
 
global
 
majors
 
like
 
CLSA,
 
HSBC,
 
Citigroup,
 
Crown
 
Capital,
 
Fidelity,
 
Goldman
 
Sachs,
 
Morgan
 
Stanley,
 
UBS,
 
T
 
Rowe
 
Price
 
International,
 
Capital
 
International
 
and
 
ABN
 
Amro
 
among
 
others
 
to
 
enter
 
the
 
Indian
 
financial
 
market.
 
 
Fidelity
 
FID
 
Funds
 
Mauritius
 
has
 
 bought
 
a
 
substantial
 
stake
 
in
 
UTV
 
Software
 
in
 
March
 
2009
 
for
 
approx.
 
US$
 
2.34
 
million.
 
 
Baring
 
PE
 
Fund
 
has
 
 bought
 
major
 
stakes
 
in
 
Mphasis,
 
a
 
leading
 
software
 
company
 
in
 
India
 
in
 
March
 
2009
 
for
 
approx
 
US$
 
25.55
 
million.
 
 
Kotak
 
Mahindra
ʹ
s
 
investment
 
 banking
 
 business
 
signed
 
an
 
exclusive
 
alliance
 
with
 
GCA
 
Savvian
 
Group
 
Corp.,
 
a
 
medium
sized
 
 Japanese
 
 bank
 
run
 
 by
 
 bankers
 
pooled
 
from
 
Goldman
 
Sachs,
 
KPMG,
 
Credit
 
Suisse
 
and
 
Merrill
 
Lynch
 
and
 
Co.
 
Inc.,
 
for
 
international
 
mergers
 
and
 
acquisitions
 
(M&A)
 
in
 
the
 
so
called
 
India
 Japan
 
corridor.
 
 
Goldman
 
Sachs
 
picked
 
up
 
an
 
8.16
 
per
 
cent
 
stake
 
in
 
New
 
Delhi
 
Television
 
Ltd
 
(NDTV)
 
and
 
a
 
minority
 
stake
 
in
 
Sterling
 
&
 
Wilson
 
Pvt.
 
Ltd.
 
 
Nomura
 
Holdings,
 
the
 
largest
 
 Japanese
 
securities
 
firm,
 
launched
 
its
 
equity
 
sales,
 
trading
 
and
 
investment
 
 banking
 
operations
 
in
 
India
 
though
 
its
 
subsidiary
 
Nomura
 
Financial
 
Advisory
 
and
 
Securities.
 
Nomura
 
has
 
integrated
 
the
 
franchises
 
of
 
failed
 
US
 
investment
 
 bank,
 
Lehman
 
Brothers
 
units
 
in
 
India,
 
which
 
it
 
had
 
acquired
 
in
 
October
 
2008.
 
 
Morgan
 
Stanley
 
is
 
putting
 
US$
 
19.72
 
million
 
into
 
its
 
Indian
 
retail
 
stock
 
 broking
 
and
 
portfolio
 
management
 
services
 
firm
 
Morgan
 
Stanley
 
India
 
Financial
 
Services
 
(MSIFS).
 
The
 
firm
 
recently
 
launched
 
private
 
wealth
 
management
 
services,
 
primarily
 
for
 
the
 
high
net
 
worth
 
individuals
 
(HNI)
 
and
 
non
resident
 
Indians
 
(NRI).
 
 
Recent
 
deals
 
 by
 
Blackstone
 
in
 
Nuziveedu
 
Seeds
 
(US$
 
50
 
million)
 
and
 
Morgan
 
Stanley,
 
through
 
its
 
Asia
 
fund,
 
for
 
a
 
minority
 
stake
 
in
 
Biotor
 
Industries
 
(US$
 
37.8
 
million)
 
are
 
instances
 
of
 
continued
 
interest
 
of
 
FIIs
 
in
 
Indian
 
markets.
 
 
Private
 
equity
 
firm
 
Blackstone
 
has
 
taken
 
up
 
a
 
26
 
per
 
cent
 
stake
 
in
 
MTAR
 
Technologies
 
for
 
US$
 
65
 
million.
 
 
Citigroup,
 
Morgan
 
Stanley,
 
Goldman
 
Sachs
 
and
 
BSMA
 
have
 
picked
 
up
 
a
 
combined
 
stake
 
of
 
over
 
seven
 
per
 
cent
 
in
 
Gitanjali
 
Gems
 
at
 
US$
 
23.51
 
million.
 
 
Fidelity
 
Investments
 
International
 
has
 
picked
 
up
 
close
 
to
 
seven
 
per
 
cent
 
equity
 
in
 
Transport
 
Corporation
 
of
 
India
 
(TCI)
 
for
 
US$
 
10.72
 
million.
 

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