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The Indian equity markets have seen Rs 3.5 lakh crore FII inflow in the past 5 years, including 20 months or one-third of the time when the FIIs inflows were negative. A simple observation of the past 5 years’ data indicates that the Sensex, the barometer of the Indian markets, has fared well on back of strong FII inflows, be it between 2009 and 2010.
Equally so, the reversal was visible in 2008 and 2011, when the markets had collapsed. The fortunes of Indian stock markets has a lot to do with FII inflows and 2012 alone accounted for 38 per cent of the net sum that trickled in the past 5 years. Much has been made of stake increase by FIIs in Indian companies, with the standard belief that companies in which FIIs increase their stake see an improved stock performance. If FII movement is any indicator, it tells a different story. In the six months after the announcements were made, FII monthly investments were up on an average by only 8 per cent compared the six months prior to the announcement.
To read in detail about stocks where FIIs doubled their stake in the past five years and where they reduced their exposure by half...
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