InvestorQ : FIIs are buying heavily into the Indian markets on a daily basis. Does it mean that this bull rally will continue much longer?
Riya Dwivedi made post

FIIs are buying heavily into the Indian markets on a daily basis. Does it mean that this bull rally will continue much longer?

Answer
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1 year ago


How much and why are FIIs buying?

If you look at the FII numbers in the last 3 months, the FIIs have brought in nearly Rs.50,000 crore into India since February this year. While this is a big number, you must also remember that FIIs withdrew nearly Rs.85,000 crore from Indian markets in the last year (2018). It is from this perspective that the FII buying must be seen. Many of the FIIs are buying for 3 reasons:

· FIIs are expecting a stable government post the elections and see that as positive for the reforms process.

· They are expecting the GDP growth to continue at above 7.5% in India even as the IMF has been talking about a slowdown in earnings growth

· FIIs are expecting earnings of Indian companies to pick up in the next 2-3 quarters and thus they anticipate the P/E ratio to temper automatically.

Will the FII buying continue in 2019?

There are lot of question marks at this point of time. It will be depend on the nature of the government after the elections. A stable government will be preferred by the FIIs. Also it will depend on oil prices not spurting too much and the rupee not weakening too much. Both are not positive for FII investments. Above all, the way the government handles bank NPAs could be the key to what FIIs will do in the coming year.