FIIs buy shares worth $1 bn in 8 days. Is worst of foreign selling over?

Deutsche Bank has said fears of foreign institutional investors capitulation are receding as they have bought India shares worth $1 billion over the past eight sessions following Reserve Bank of India governor Raghuram Rajan’s recent announcements.

“Recent announcements over the FCNR-B, supportive trade data and easing investment facilitation in debt markets have resulted in imparting long needed and much sought after credibility over both - the financing of the CAD and the actual CAD,” said Deutsche bank in a report.

“While it may be premature to conclude if the worst of the FII selling is over, we highlight anecdotal data which illustrates that since the global financial crisis, bouts of sharp currency depreciation in India have generally been followed by periods of strong FII inflows into equities,” the report said.

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FIIs have ploughed back 25 per cent of the entire outflows of June-August 2013 during the past eight days after Rajan’s announcement easing all curbs on the movement of capital, according to the German financial services major.

Deutsche advises investors to focus on global recovery plays, rupee depreciation beneficiaries like Hindalco Industries Ltd , Tata Consultancy Services Ltdand rural plays like ITC and HDFC Bank .

Agencies