Despite the uncertainty over the outcome of the General Elections and fears of foreign institutional investors quitting Asia en masse, FIIs have been flocking to the Indian markets.

Statistics on the Securities and Exchange Board of India website show that on average, one FII a day registered itself with the capital market regulator in the last three weeks. As a result, the FII headcount has increased from 542 on May 13, 2004 -- the day of the first phase of polling -- to 563, on June 7.

And all this during a time when the markets have been volatile, leading experts and analysts to suggest that FIIs have been exiting the country and hedge funds withdrawing their money from India.

Krishnamurthy Vijayan, chief executive officer of JM Mutual Fund, said: "The fears of FIIs exiting India have been grossly exaggerated. Most FIIs have a well-researched and long-term view of the market."

According to the head of broking at a leading brokerage, "FIIs might stop buying in the short-term, but they will not just sell if things are difficult for a while." The India story still continues, according to the more optimistic segments of the market.

However, there is a caveat here. Market watchers point out that most of the newly added FIIs may have applied for registration earlier and the numbers might be a reflection of that. But in recent times, Sebi has considerably speeded up and simplified the process of granting registration to the FIIs.

In fact, the most recent report by Emerging- Portfolio.com, which tracks bond and equity flows in emerging markets, said India-dedicated funds had seen positive inflows again in the last week of May after a lull of several weeks.