The Ministers & Missionaries Board of American Baptist Churches of USA and The State Teachers' Retirement Fund of USA have joined the long list of 443 foreign institutional investors desirous of reaping good returns from the Indian markets.

The Securities and Exchange Board of India has permitted 15 new FIIs in the first four months of 1997, taking the total number of registered FIIs to 443 by April-end. The list of new FIIs registered with the market regulator include names like Templeton Investment Counsel, The Yasuda Trust & Banking Company, Global Fund, Morgan Guarantee Trust, ABN Amro Investment and Fondigest SpA of Italy.

However, the actual number of FIIs registered by SEBI during this four-month period is lower than the number registered in the corresponding period last year. Even the total investments by all the SEBI-registered FIIs has been sharply lower at around $ 460 million against $ 1,500 million in the same period last year.

Of these, The World Trust Fund, State Street Bank & Trust, TCW, Morgan Guarantee, Prudential Portfolio and Pendal Nominees have reportedly begun investing in Indian stocks. Their entry has helped other existing FIIs to churn their portfolio and look for better investment opportunities.

``We foresee the stocks will go upwards from hereafter,'' said a broker at a leading FII brokerage. ``With the passing of the Budget and the inevitable petro price hike discounted, the market is set to go up and FIIs will be there sooner than expected,'' he added.

In March this year, FIIs had increased their exposure by over $ 175 million (against $ 312.2 last year) in the domestic market. However, in April apprehensions over the political crisis prompted FIIs to hold back their investment plans. With the passing of the Budget, the political and investment climate is likely to improve.

``Recent developments apart, we are confident of a good amount of FII funds coming in after the third week of May,'' said a dealer at a leading UK-based FII. ``With interest rates falling, investors are expected to switch from debt instruments to equity,'' he added.

Nimesh Kampani, chairman, JM Financial & Investment Services, feels the equity markets are expected to pick up, following the decline in interest rates in the economy. ``The equity investment situation has been improving in the country,'' added a dealer at another leading FII. ``Following the decline in the nominal interest rates, even the real interest rates and inflation in the economy will decline.''

Morgan Stanley, the US investment banking major, had in its recent survey termed India as one of the best performing emerging markets. In fact, India was placed third after Sri Lanka (15.4 per cent) and China (13.2 per cent). `In India, positive political developments including the swearing in of a new Prime Minister who expressed confidence in the passage of a market-friendly budget more than erased the -8.1 per cent loss in March,'' the Morgan Stanley note added.

Interestingly, market intermediaries forecast a 15-20 per cent jump in the Sensex within three or four months. With UTI preferring to stay away, the FII entry is likely to see a healthy upward trend in the stock prices.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.