How dependent is the recovery of the stock markets on the return of FII investments?
Besides the selling that has been happening from January onwards, more concentrated selling of Rs 22,000 crore has occurred between the beginning of September and the middle of November. This has largely been absorbed by domestic institutions, such as insurance companies and mutual funds. Significantly, Rs 5,600 crore worth of net equity was bought during this period by retail and HNI (high net worth individual) investors in India. This shows that the future of stock markets will be influenced more by domestic players than by FIIs. However, before the stock markets begin to recover, they need to stabilise. Volatility is a larger part of the concern of Indian investors. I travel widely within the country. When I speak to investors, all of them agree that equities are at an attractive level at present. But they want the sharp rise and fall to come to an end. They want a more stable market. The sharp fall in the market is likely to get arrested at the end of the selling spree by FIIs. As
