Mecklai Graph of the day: FIIs inflow in India, YTD

The Indian financial markets have witnessed favouritism among the investing Diaspora compared to its Asian counterparts such as South Korea, Taiwan, Thailand and Indonesia. The broad indices received close to $11 billion (Rs. 55,000 crores), the highest in Asia with South Korea receiving the next best inflows with a distant $6.2 billion from YTD. Another $4.7 billion was received by way of Debt investments, to a total of close to $15 billion.

A majority of flows were seen in the Jan March period and money seems to be flowing in the more recent July and August period. The same was reflected on the bourses with the Nifty registering a 13.2% gain in the said period. In the Jan March period when the inflows were registered the USD/INR which was trading at 53.298 levels at the start of the year gained strength up to 48.56 levels by the beginning of March. That was a close to 7% appreciation in the Indian rupee.

Now with signs of another round of money flows expected and the stock markets showing early signs of optimism, it is of great value to gauge the whereabouts of the Indian Rupee. With Chidambaram taking over the reins of the Finance Ministry and looking at easing the labyrinth like systems and rules promulgated by his previous colleagues holding office the stake of the economy, including the rupee may see some moderation. The USD/ INR pair could be helped to 52.50 levels with the twin deficits, stunted GDP growth rate and the economic quandary of Europe refraining the rupee from such levels.

The below graph charts the FII Inflows (Equity and Debt) in India YTD.

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