Retail investors pull out Rs 10K cr from BSE in a year

On the other hand,clients of brokers (mainly ordinary investors) have pulled out over Rs 10,000 crore through the BSE platform alone in 2009. This indicates that big funds have benefited from the recent bull run in the stock markets even as retail investors exited from the scene. Over Rs 2,659 crore of this outflow has come in the month of September,as per figures available with the BSE. However,retail investment figures from the NSE were not available. “Domestic FIs invested at a time when others were selling and blue-chip shares were available at rock-bottom prices,” said a dealer.

Significantly,FII investment through participatory notes (PN) route has come down from 38.6 per cent of total FII assets in January 2008 to 15.5 per cent in August 2009. Total FII investments (including secondary market,IPOs and ADR/GDR inflows) are likely to cross the $10 billion-mark by the end of this month. A hefty $9.851 billion (Rs 47,674 crore) have already been poured into the bourses by overseas entities so far this year,according to figures provided by the Securities and Exchange Board of India (Sebi).

Will the FII inflow sustain in the coming months? “If the government puts its reform agenda in order and starts showing that it can walk the talk by actually implementing the agenda,then my guess is that the India growth story gains more credibility and attracts even more foreign investments. However,if the government does not deliver on its reform agenda,then investor interest will wane quickly. The India story now hinges as much on the global recovery as it does on government actions,” said JP Morgan India chief economist Jahangir Aziz.

Investors’ optimism consolidated last month after its surge in August,with portfolio managers reassessing their positions to gradually embrace the current global economic recovery,according to the Merrill Lynch survey of fund managers for September. Investors remain optimistic that the global economy is moving out of recession and towards the “Goldilocks” scenario — where conditions are neither too hot nor too cold. While a net 72 per cent of the panel expects the world economy to strengthen over the coming year,the same proportion also sees “below trend growth and below trend inflation” over the next 12 months.