Foreign Institutional Investors, who pulled out heavily from Indian bourses last year, are looking at it with renewed interest and analysts believe they are likely to unwind their bearish positions and start investing in promising and attractive new scrips.
According to the latest shareholding data available, about 40 blue chip stocks including Reliance Industries, Infosys and Bharti Airtel account for as much as 80 per cent of the entire FII portfolio in India stocks.
"Global fund managers are turning bullish on their exposure into Indian stocks as blue chip stocks have become extremely attractive for them and are likely to increase their investments into domestic stocks," P K Agarwal, director of Delhi-based Purpleline Investment said.
Analysts said that in the bearish phase FIIs considered it as the best option to expose themselves in only the large market capitalisation and strong fundamental-based stocks.
"Most of the FII portfolio is concentrated in top large cap stocks, which was their bearish phase strategy, now with the recovery in the equity market and valuations turning attractive they are likely to widen their exposure in Indian stocks," Alex Mathew, research head, Geojit Financial Services said.
Analysts also believe that retail investors and small-time traders which had turned away from equity market are now coming back into the market as well.
In the quarter ended March, 2009, FIIs decreased their positions in banking and telecom stocks while insurance companies increased their exposure in the same.
The BSE benchmark index Sensex on Monday gained as much as 731 points to close above the 12,000-level with metal and IT stocks leading the pack.
The FIIs have made net investments of Rs 6,508.20 crore (Rs 65.08 billion) in Indian equities in April, according to latest data available with the SEBI.
