FII appetite not over yet: Foreign investors can still lap up $135 bn of stocks in Nifty

Foreign investors have been buyers in Indian equity for every month for almost a year now but their quantum is not yet outsized and they can still buy around $135 billion of stocks in the wide-based benchmark index Nifty, an UBS research report said.

Foreign institutional investors are largely “overweight” on Indian equities and they have been buyers every month for almost a year excluding January 2014 when they were marginal net sellers.

FIIs hold $320 billion of stocks in Indian equity markets," UBS said in a research note today adding that given the continued FII inflow, more so in a narrowing basket of quality sectors/stocks, a lot of investors worry about limited room to buy.

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“Our calculations show that FIIs can still buy around $150 billion worth of stocks in the MSCI India (around USD 135 billion in the Nifty),” the report added.

The global brokerage major believes the Indian equity markets may consolidate but there is still room for bullishness.

“Markets may consolidate after the run up but significant downside may be limited,” the report said.

“We remain bullish on Indian equities as current valuations are not expensive in our view and growth recovery hopes will likely ensure premium valuations,” UBS added.

UBS’s Nifty 2014 year-end target is 8000. The wide-based Nifty was trading down at 7,745.05, down 45.40 points in late afternoon trade today.

PTI