Foreign institutional investors (FIIs) have invested US$ 1.16 billion in equities and bonds, taking total net inflows in 2011 so far (till March 16, 2011) to US$ 1.63 billion, as per the data available with the Securities and Exchange Board of India (SEBI). In 2010, foreign investors bought stocks and bonds valued at nearly US$ 221.34 billion, a record number in a year.
Net FII investments as on March 29, 2011 were recorded at US$ 1.13 billion. India witnessed high mergers & acquisitions (M&A) activity during February 2011. The month witnessed Indian corporates seal deals worth over US$ 8 billion in February 2011, three times what was recorded in January 2011 about US$ 2.6 billion, according to the data put out by Thomson One Banker and E&Y analysis. In terms of volume (deal count), domestic deals dominated the space. Of the total 71 deals struck during the month, 42 were domestic deals, while inbound and outbound made up 17 and 12 deals respectively.
India is expected to have received more than US$ 7 billion in private equity (PE) investments in 2010, up from US$ 3.5 billion in 2009, according to a global consultancy firm Ernst & Young (E&Y). Sectors such as power and transportation, consumer and branded products, infrastructure ancillaries, education and financial services, and healthcare are likely to witness increased PE activity in 2011.
In line with its focus on infrastructure development and also deepening the corporate debt market, the Centre has increased the FII investment limit in corporate bonds to US$ 40 billion from the prior limit of US$ 20 billion. The additional limit of US$ 20 billion will be available to FIIs only for investments in corporate bonds issued by companies in the infrastructure sector, as highlighted by Mr Pranab Mukherjee, the Finance Minister in his Budget speech. Prior to this announcement, the total FII investment limit in corporate bonds was pegged at US$ 20 billion, including a US$ 5 billion sub-limit for bonds with a residual maturity of over five years and issued by companies in the infrastructure sector.
SEBI has announced revised reporting formats for FIIs on their offshore derivatives instruments (ODIs), which include participatory notes (PNs). ODIs have Indian equity or debt as underlying securities and are issued by registered FIIs or sub-accounts to clients abroad.
Starting April 2011, reports providing details of ODI/ PN activity for the month should be filed before October 10. This is apart from the monthly summary report FIIs have to file on the seventh of every month, for the previous month.
Exchange rate used: 1 USD = 45.18 INR (as on March 2011)