MUMBAI, July 2 (Business Standard): Foreign institutional investors (FIIs) continue to bet big on the India story, with their net investment in Indian equities already surpassing the $10 billion mark in 2014.
According to the Securities and Exchange Board of India (Sebi), FIIs have invested $9.96 billion so far this calendar year 2014. In the last two trading sessions, they have invested an additional $357 million (Rs 21.45 billion) as per provisional data, taking their net inflow to over $10 billion mark.
With this, for the third consecutive year, their net investment in the Indian equity space has crossed $10 billion. In 2012, they made net inflow of $ 24.4 billion followed by $20 billion in 2013. Their cumulative investment since November 1992 stands at $156 billion (Rs 7456.79 billion), data shows.
The strong inflow in equities has seen the Bombay Stock Exchange (BSE) 30-stock index, S&P BSE Sensex, hit a record high of 25,817 in intra-day deals on Wednesday.
Analysts say that after a five lacklustre years for the Indian equities as an asset class, the road ahead looks promising with the onset of a new multi-year bull run. They expect the run-up to be supported by an improvement in corporate earnings and the overall economy.
"Markets returns are a function of three pillars - earnings, valuations and flows. On a relative basis, India continues to trade at a premium to the region, but given its stronger growth expectations, it seems well placed on a PEG (price/earnings to growth) basis versus peers. India's relatively low market cap-to-GDP and minuscule household equity penetration suggest that there is substantial headroom for equity markets to rally," points out a recent report from Avendus Wealth Management.
"Given the positive election outcome, earnings are expected to grow at 16 per cent CAGR over FY14-16. As earnings growth recovers, valuations will also tend to trade above average of 15x. Should the Budget lay down the foundation of a more sustainable growth trajectory for the next five years, the 'hope rally' that has unfolded in the run up to the election will definitely have much more steam before correction sets in," it adds.
