FIIs pump Rs 6,500 cr in 2000

MUMBAI, DEC 30: Indian markets may not have performed well in the year 2000, but foreign funds remained aggressive, providing liquidity an...

MUMBAI, DEC 30: Indian markets may not have performed well in the year 2000, but foreign funds remained aggressive, providing liquidity and ample action. FIIs pumped a huge $ 1,492.20 million, or Rs 6,511.20 crore, into Indian markets in the year 2000 with the lion’s share of their monies going into the equities markets.

The FII calendar 2000 inflow of $ 1,492.20 million in India is not their biggest annual inflow though. Their annual net inflow peaked to $ 3,058.20 million in calendar year 1996. On the other hand, FIIs pulled out funds from the Indian markets for the first time in 1998. In 1998 FIIs withdrew $ 338 million and pumped in a net $ 1,559.90 million in 1999.

The FII money power is evident from the cumulative figures of FII investment in the country which have now reached a massive $ 11,702.10 million after including the inflow of the year 2000 of $ 1,492.20 million. The cumulative investment in Indian currency is a staggering Rs 41,978.90 crore. There are a total of 556 FIIs registered in India.

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On the outlook of FII inflow for calender 2001, analysts feel that Morgan Stanley’s decision recently to adjust global indices to free-float would lead to a decline in India’s weightage in MSCI indices. This is a cause for concern with respect to future FII inflows.

FIIs worldwide are cutting exposure to tech stocks as they get more realistic about the prospects of the new economy. “If 2000 was the year of being overweight in tech, the next year will be the reverse. FIIs are already preparing for that,” a frontline broker said.

According to recent statistics, one leading FII alone has a huge 50 lakh shares of Infosys (working out to a market cap of Rs 2,800 crore), which is around 35 per cent of its total India exposure. “If such FIIs had to cut their tech weightage, think of the impact,” a dealer warns. Another leading US-based FII, which had about 20 lakh shares, cut its holding by over 6 lakh shares. Another foreign entity, which held about 25 lakh shares, also cut exposure recently.

Even the Morgan Stanley Capital International (MSCI) India Index has a 24 per cent weightage on tech stocks, and if FIIs with an exposure to India are to trim their holdings down to this level, it will take some selling to get there. Already, from its peak levels, the fall in value of the Infy FII holding works out to a hefty Rs 13,300 crore. The Infosys annual report had also mentioned that as on March 31, 2000, 270 FIIs hold over 1.61 crore shares in the company, with a voting strength of 24.38 per cent. This means there has been only a marginal change in holdings since then.