The year 2012 saw the introduction of a new category of foreign investors in the market. In January 2012, the Securities and Exchange Board of India allowed eligible foreign nationals to invest directly in India through Qualified Foreign Investors (QFI) route.
Needs time to pick up
This was done mainly to widen the category of investors, attract more foreign funds, reduce market volatility and deepen the capital market. Despite the SEBI nod, flows through the QFI route have been significantly low. However, analysts said that flow will gradually increase with recovery in the markets.
“The QFI concept was started with a positive objective of giving foreign individuals an opportunity to directly invest in the markets. However, the product is still in its early stage and needs further time to pick up,” said Jagannadham Thunuguntla, Strategist and Head of Research, SMC Global Securities
SEBI rolled out detailed guidelines on QFI investments on January 13. QFIs could earlier enter the markets through the mutual fund route to enter India (effective August 9, 2011). QFIs are allowed to invest only through SEBI-registered Qualified Depository Participants.
As of August, QFI inflows in the equity markets totalled to about Rs 37 crore. Much of the investment at that time was in Claris Lifesciences. Apart from that, there were investments in twelve other listed companies. The other top investments were in HDFC at 0.00034 per cent (Rs 35.79 lakh) and ITC at 0.00017 per cent (Rs 34.59 lakh).
Uncertain market conditions saw QFIs picking up no-risk blue chip companies such as Tata Consultancy Services, Reliance Industries, Power Grid Corporation and State Bank of India.
Inflows have increased slightly since August 2012. According to data on the depositories, QFI investment in listed companies has increased to Rs 43.68 crore as of December 27, 2012.
The number of stocks that they have bought has also gone up significantly from 13 to 31.
Becoming confident
Analysts felt that QFIs are now becoming more confident about the Indian markets. They have also bought stake in recently listed companies such as PC Jeweller. According to latest data, QFIs have 0.0111669 per cent stake amounting to about Rs 2 lakh.
As the year comes to close, the top three scrips in terms of stake held by QFIs were Zen Technologies at (0.0792156 per cent), Hexaware Technologies (0.0677201 per cent) and Bilcare (0.0106157 per cen).
In value terms, the top three investments were in Claris Lifesciences (Rs 3,378.75 lakh), followed by ICICI Bank (Rs 284 lakh) and Hexaware Technologies (Rs 168.6 lakh)