Why FII activities growing rapidlly India?

Question

Why FII activities growing rapidlly India?

Answer 1

INDIA'S weightage in the Morgan Stanley Capital International (MSCI) index, a key factor on the basis of which FIIs allot funds for investments, could get a boost in the wake of increased FII investment limit, foreign institutional investors (FIIs) said.

However, the Government's decision to raise FII investment limit in domestic companies in line with foreign direct investment (FDI) may not see an immediate positive impact on the depressed domestic stock markets.

Nevertheless, they were confident that this may lead to higher allocation of funds by FIIs for investment in the Indian market.

Speaking to Business Line ASK-Raymond James Chief Executive, Mr John Band, said ``Hike in FII limit would help in the medium term by attracting more foreign money in the stock markets''. But he said in the short term this decision is not expected to boos t the sentiment in the falling markets.

After the terrorist attacks in the US last Tuesday, FIIs have been selling equities on the domestic market. This has led to a sharp fall in stock prices in the last one week. In just four days after the US attacks they sold equities worth Rs 378.6 crore and this month they have been net sellers to the tune of Rs 454.1 crore in equities.

A leading FII official said the impact of this is expected to be visible early next year when fresh fund allocation to various countries are made by FIIs.

Refco-Sify Securities Chief Executive, Mr Vineet Bhatnagar, said ``In case companies increase FII limit beyond 49 per cent, the weightage in the MSCI Index would increase and attract more foreign funds in the Indian markets''.

A number of foreign funds invest in global markets based on the country's weightage in the MSCI Index. Funds usually invest more in countries which have higher weightage in MSCI index and vice-versa.

In May, India's weightage in the MSCI Index had dropped following the firm decision to move to free-float concept. MSCI's Indian affiliate, JM Morgan Stanley, after the announcement, had stated that India's weight in the index could be higher due to the increased FII limit of 49 per cent in number of companies was not taken into factor at that time. The next review of the index is expected in November.

On the possibility of increased takeover activities after the RBI decision, a senior official of a FII said ``this possibility looks rare as under the existing RBI guidelines a FII cannot hold more than five per cent in a single company''. This five per cent limit will lead to widespread FII holding in companies and reduce takeover possibility, he said.

Answer 2

must see this links for your question :

http://www.rbi.org.in/SCRIPTs/Publicatio...

http://www.domainb.com/economy/general/2...

http://myiris.com/shares/company/reportS...

http://www.rupe-india.org/36/deepening.h...

Answer 3

its mainly due to the high returns from our stock markets. if you compare the returns from the other markets and the that of india n china it relatively higher. due to the downturn is US and the consequent credit crunch in US n EUR the FII flows have slowed down consideribly.