Mumbai, May 17: Foreign institutional investors (FIIs) are expected to give a rousing welcome to a Narendra Modi-led government at the Centre with experts expecting inflows to be around $24 billion this year. FIIs have so far pumped in $7 billion into equities this calendar year.
“The FII money could come in hordes. We could see them investing $22-25 billion this year,” said Paras Bothra of Ashika Stock Broking. In 2013, FIIs pumped in more than $20 billion into equities.
Based on his track record in Gujarat, many foreign brokerages had earlier expressed optimism that Modi as a Prime Minister could lead the country to a higher growth path. Moreover, with the Indian economy headed for a recovery, it is felt that FIIs are unlikely to take India off their radar.
“There are several things that are now going in favour of the Indian markets. We are now entering a structural bull phase. There are various uncertainties in the developed markets that include relatively slower economic growth and tensions in Ukraine. On the other hand, the India growth story is one which the foreign investors cannot ignore,” a research head of a domestic brokerage pointed out.
Foreign inflows are expected to remain robust on expectations of concrete actions on reforms. FIIs feel the Centre may initially focus on the administrative front by fast tracking investment projects.
“Stepping up efforts to roll out infrastructure investment projects are likely to provide a lift to the investment cycle,” a note from HSBC said.
According to HSBC, energy, infrastructure and utilities could see action on the policy front in the coming days and attract foreign funds.
“IT stocks may come under pressure as strong inflows will lead to an appreciation in the rupee,” a broker said.
Planning Commission deputy chairman Montek Singh Ahluwalia today resigned while the other members will also put in their papers. The other members are B.K. Chaturvedi, Saumitra Chaudhuri, Syeda Hameed, Narendra Jadhav, Abhijit Sen, Mihir Shah, K. Kasturirangan and Arun Maira.