Indian stocks attract Rs 34,300-cr foreign fund in Q2

New Delhi, Oct 13 : Betting big on Indian stocks,one of the best among the emerging markets, foreign fundhouses have invested a hefty Rs 34,300 crore during the secondquarter of this fiscal.

During the July-September period, foreign institutionalinvestors (FIIs) made a net investment of Rs 34,313 crore inequities, as per the data available with the market regulatorthe Securities and Exchange Board of India (SEBI).

With Indian bluechips giving nearly 17 per cent returnsduring the period, FIIs are bullish on good returns fromemerging markets, like India.

Analysts said nearly half of FII inflows have come viaqualified institutional placements (QIP) and IPOs combined.

"This trend of inflows would broadly sustain over thelong term considering the strong dynamics of the Indianeconomy," domestic brokerage firm Angel Broking said in aresearch note.

The trend of strong FII inflows to the tune of Rs 31,000 crore or USD 6.3 billion witnessed during Q1 FY2010 gainedfurther strength during the September quarter this fiscal.

With this, total cumulative FII inflows in 2009 crossedthe USD 10 billion mark during September 2009 and stood atabout Rs 60,000 crore (USD 12.4 billion) at the end of the month.

Indian markets gave 19 per cent return to those whoinvested during the July-September period.

According to an analysis of MSCI Barra indices-- thatmeasures returns from various stock markets across the world--bourses in Brazil and Russia gave over 26 per cent return toinvestors while those in China gave only four per cent.

In the latest quarter, September saw the highest monthly inflow of Rs 18,300 crore. While fund flow in August was Rs4,900 crore, in July it was Rs 11,000 crore.

Interestingly, during the three month period last year, FIIs pulled out a net Rs 11,326 crore from the country's stockmarkets, which saw Sensex giving a negative return of five percent. The global financial crisis turned worse with thecollapse of US financial services major Lehman Brothers lastSeptember.

Foreign funds pulled out money from Indian marketsto meet obligations in their home countries.

Last year, FIIs were net sellers of Indian stocks worthRs 52,900 crore, as per the SEBI data. This trend continued till February 2009. However, by theend of March they started betting on Indian markets.

FIIs invested about USD 17.7 billion (about Rs 70,000crore) in 2007, the highest ever so far.