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FII inflows
Indian has managed to attract strong FII flows so far in the year 2014 despite geo-political
uncertainties and this was possible because India managed to bring down fiscal deficit,
current account deficit and revival in GDP growth.
Since the new Government took over, foreign investors have pumped in over Rs. 45,000
crore ($7.5 billion) into Indian equities, taking the total investments to Rs. 77,803.24 crore
($12.947 billion) this fiscal.
According to a study by Bank of America-Merrill Lynch, foreign institutional investors
ownership in the Sensex hit an all-time high of 22.5 per cent in the June quarter.
The mutual fund industrys assets under management crossed Rs. 10 lakh crore. What is
heartening is the interest of small investors in equity mutual funds. These investors have
avoided stocks since the 2008 rout.
Gautam Chhaochharia, Head of India Research, UBS, said several small steps in the right
direction have boosted the confidence on Indian equity.
Foreign direct investment in defence and railway infrastructure projects and proposals on
real estate investment trusts/ infrastructure investment trusts are some of the initiatives
welcomed by all, he said, adding UBS maintains a year-end target of 8,000 for Nifty.
There is progress even in complex areas such as labour reforms, Good and Services Tax
roll-out and initiating amendments to the Land Acquisition Act, Gautam added.
In a note, Mirae Asset Global Investments, one of the worlds largest investment managers
in emerging market equities, said Modis team had quickly settled down to address pressing
issues of policy paralysis. Modis growth model is a blend of China-like infrastructure,
coupled with Singapore-like bureaucratic efficiency, adapted to India, Mirae said. We
believe India is on the cusp of a multi-year bull market.
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Signs of recovery
Anoop Bhaskar, Group President and Head of Equity, UTI Mutual Fund, said: We are seeing
signs of economic recovery after three years of slowdown. Various sectors are now showing
signs of bottoming out from the slowdown. One has to wait and see whether it could be V-
shaped or U-shaped on the economic front.
Every general election presents optimism in stock markets and after the three months, the
momentum peters out. But this time, the market has been performing well as for the first
time after 1984 we got a single party rule, and expectations are running high, he added.
In this Government, no individual is trying to hog the limelight and for the first time in
several years, supremacy of the Prime Ministers authority has been visible.
Besides, a change in the Government work culture, empowering bureaucrats and fast
decision-making signal that the budgeted amount will be put to use more efficiently,
Bhaskar said.
"I agree that investor sentiment is really very solid. It is not just in India. We have talked to
many international investors and almost uniformly there is a lot of confidence in India's
growth potential now and we certainly are in a very good position," said Saugata
Bhattacharya, Economist, Axis Bank.

"A better environment is beginning to set up for a recovery to happen without really pushing
inflation higher because in this particular quarter (June qtr), if you look at GDP deflator
based inflation, it has actually gone up for the whole GDP by almost a per ..

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