Public sector undertaking refinery companies in the oil marketing business pulled down the net profit growth of India Inc during the quarter ended March 31.

Net profits of 2,850 companies for which results are available, excluding banks and those in financial services, went up 40 per cent compared with the same period a year ago.

Excluding the refineries, the remaining companies reported a robust 71 per cent jump in net profit to Rs 86,040 crore, against Rs 50,425 crore in the previous comparable quarter.

The refining companies posted a 56 per cent drop in net profit to Rs 7,209 crore, from Rs 16,235 crore during the quarter. The refinery companies, which sell petrol, diesel, domestic LPG and kerosene below imported cost were also paid less compensation by the government. These companies posted higher net profit in the previous year’s quarter, mainly due to the bulk of compensation being received in the fourth quarter of FY09.
 

Bharat Petroleum and Hindustan Petroleum posted an 80 per cent drop in net profit to Rs 703 crore (Rs 3,628 crore in last year’s quarter) and Rs 758 crore (Rs 5,104 crore), respectively. Indian Oil Corporation reported 16 per cent fall in net profit to Rs 5,557 crore (Rs 6,623 crore); it managed to control the fall in net profit growth on the back of other operating income.

Auto, steel, pharma do well
The other sectors that reported over 100 per cent growth included crude oil and natural gas, mining and minerals, non ferrous metals, automobiles, auto ancillaries, fertilisers and realty. Steel, pharmaceuticals, entertainment, jems and jewellery and textiles sectors were also back in the black.

However, the net profit performance of refineries, telecom services, cement, consumer durables, shipping, sugar, hotels, logistics and cable companies pulled down the overall numbers.

Meanwhile, the 2,850 companies posted aggregate net profit of Rs 93,250 crore in the quarter, as compared to Rs 66,659 crore in the corresponding quarter of the previous year.

The net profit margin of the 2,850 firms declined to 8.6 per cent from 10 per cent in the corresponding quarter. Operating profit margins declined almost 200 bps, from 19.6 per cent to 17.8 per cent.

The refineries, however, played an exactly opposite role in corporate India’s sales performance during the quarter. The 2,850 companies reported a 24 per cent jump in sales, due to a 46 per cent rise in sales growth of the six refining companies, including Reliance Industries.

Excluding them, the sales growth of India Inc was up 19 per cent during the March 31 quarter. Some of the smart growth in the top line can be attributed to higher commodity prices and some of it to the low base effect.

Tata group companies posted robust growth in net profit by reporting turnaround during the quarter. Twenty-four firms from the group reported combined net profit of Rs 8,115 crore for Q4 of FY10, against a net loss of Rs 2,561 crore in the same quarter of last year.

Courtesy : http://www.business-standard.com/india/news/india-inc/s-net-rises-40-in-march-quarter/396784/

Jhunjhunwala, India’s Buffett, Sees Sensex Rising (Update1)

Dec. 11 (Bloomberg) -- Rakesh Jhunjhunwala, who predicted Indian stocks would fall two months before the benchmark Sensitive Index peaked in January, says the worst may be over for Asia’s fourth-biggest equity market. Stocks are poised to recover from their biggest annual decline because companies in the benchmark index are valued at less than half their four-year average, said Jhunjhunwala, named India’s Warren Buffett by Forbes magazine in March. Investors will look beyond last month’s terror attacks because the country is growing faster than almost every other market, he said. "India will see the mother of all bull runs in the next four or five years, boosted by double-digit economic growth and increased investment by domestic investors, including pension and insurance funds," Jhunjhunwala, 48, said as he smoked a Cohiba Cuban cigar in an interview at his office in South Mumbai.

The Sensex rose 7 percent since the three-day attacks that started Nov. 26 in Mumbai, trimming this year’s decline to 54 percent. The slump left the index valued at 9.6 times the earnings of its 30 companies, compared with a four-year average of 19.2, according to data compiled by Bloomberg. The measure gained 0.9 percent to 9,737.09 at 10:23 a.m. in Mumbai, set for the highest close in a month. The MSCI Emerging Markets Index of equities in 24 developing nations trades for 6.8 times earnings. ‘Great Potential’ "Indians as a society are not going to be bogged down by these terror attacks; the nation’s tolerance, skill set and democracy will prevail," said Jhunjhunwala, whose office is a two-minute walk from the Oberoi hotel, one of the locations where terrorists killed 163 people in about 60 hours. He was stuck in the office all night with seven employees, eating Nestle SA’s Maggi noodles and popcorn. "We will see a period of great uncertainty but great potential too," Jhunjhunwala said. He’s holding on to investments including Titan Industries Ltd., India’s largest watchmaker, which fell 44 percent this year, and Aptech Ltd., a computer training company that lost 84 percent. India’s economy grew at a faster-than-forecast 7.6 percent pace in the third quarter from a year earlier. The rate is the fastest for a major economy after China’s 9 percent and compares with 6.8 percent in Brazil and 6.2 percent in Russia. Investors pulled money out of India as they retreated from emerging markets, sending the MSCI developing-nation index down 55 percent this year. Stock Sales

International investors sold a record $13.5 billion in Indian equities this year as of Dec. 5, according to data from the Securities and Exchange Board of India, as global credit losses and writedowns approached $1 trillion. Investors bought a record $17.4 billion in 2007. India’s $573 billion stock market is the region’s fourth-largest after Japan, China and Hong Kong. Jhunjhunwala advised investors to be cautious and predicted the market would "pause and correct" in a Nov. 11 interview with CNBC’s Indian unit. Ranked a billionaire by Forbes earlier this year, Jhunjhunwala said he didn’t expect the Sensitive Index and the S&P CNX Nifty index to fall to their lows for the year in October. Buffett, the 78-year-old chief executive officer of Berkshire Hathaway Inc., is the secondwealthiest person in the U.S., Forbes magazine said in September. Berkshire has a market value of $161.4 billion, according to data compiled by Bloomberg. ‘Surprise’ Jhunjhunwala declined to disclose his net worth, the amount of money he manages or the stocks he wants to buy. "I was caught completely by surprise when the Nifty broke the 4,000 level; that was the rock solid bottom, I had thought," said Jhunjhunwala, who employs about 15 people and has invested about $100 million in 15 privately held companies. Futures for the Nifty gained 0.2 percent at 12:55 p.m. in Singapore. Mark Mobius, who oversees more than $24 billion in emerging- market stocks as the Singaporebased executive chairman at Templeton Asset Management Ltd., and Hugh Young, who runs $45 billion from Singapore as a managing director at Aberdeen Asset Management Ltd., agree with Jhunjhunwala. Mobius said last month that economic growth will help stocks recover. Aberdeen is looking for investments in the Indian market. "Great companies which were at that time fully valued have come back down to good valuations," Young said. India "is now looking a lot more attractive," he said. ‘Deeper Roots’ Annual inflation in India may drop to less than 5 percent in the next two months, which should result in lower interest rates, Jhunjhunwala said. Inflation slowed to a seven-month low of 8 percent in the week to Nov. 29. The rupee, the second-worst performer among Asian currencies after falling 19 percent this year, may strengthen to between 44 and 45 rupees against the dollar by March, Jhunjhunwala said. The currency gained 0.8 percent to 48.64. Jhunjhunwala recommends investors bet on gains in equities, commodities and emerging-market currencies, and declines in the U.S. dollar. "The malaise of the West isn’t a problem India is facing; we don’t have overextended banking

systems or overextended credit," Jhunjhunwala said. "The basis of India’s economic growth has far deeper roots than many other countries."

* Courtesy: Bloomberg.com

 The mother of bull runs is still to come -Rakesh Jhunjhunwala 

Here is a verbatim transcript of Investor and Trader, Rakesh Jhunjhunwala's exclusive interview with Mitali Mukherjee on CNBC TV18's Wealth Creators show. Also watch the accompanying video.

Rakesh Jhunjhunwala is India’s most successful investors; one of the stock market’s most successful stories. The sometimes maverick, often mercurial but always a respected voice. He is a wealth creator and a man who anyone who enters the stock market wants to be.  

Q: You are the first Individual Wealth Creator we are chronicling. I am curious to know, what does the term mean to you?

A: I don't know when I started on in life, I had some ambitions. My parents never liked the idea that I should go to the stock market. I started life financially with just USD 100 or only Rs 5000 and my first thought was that when I went to the markets, I had just come from Chartered Accountancy; used to earn Rs 150 a month. So my first concept in life was that I should be financially independent. I never started with the idea that I will be a great wealth creator and I will have some great wealth or anybody will know me. I thought I must be able to earn my daily bread. I loved the markets. I thought India was in a very initial stage and this would be one of the places which will develop and the opportunity would be huge. 

Q: Do you also find it odious sometimes because you are a wealth creator in your own right and I don't think you have taken on the mantle of leading a lot of people with you. But you get that. A stock that you would pick up will be picked up by others. They would want to know why Rakesh bought it - why he is buying so much or why he wants to buy more?

A: I think these are all misconceptions. When you buy stocks, you should be ensured that other people will buy stocks. Then only you should buy the stocks. I have a different concept in life. If a stock is beautiful, the suitor will come. If a girl is beautiful a suitor will come. If a stock is beautiful, a suitor will come. So I don't search for suitors when I buy the stock.

Q: Tell me where you have to be the most patient with the market?

A:  I think my greatest patience with the market was in 2001 September to April 2003. That was because I was a lone bull. I wrote an article in the Economic Times in June 2002 that India is on the threshold of a structural secular bull market and people said, he has bought stocks and he is caught and now he is asking us also to come into the cage. People didn’t just believe what I thought or what my opinion was. That was a testing period.

Q: Did it bring confidence down to its knees for you?

A: You have your conviction and  I always staked what I could afford. So say, when markets went down in August 2002, I had no problems there. In spite of my opinion, I did not stake so much that if markets did not go up in the manner that I thought, I would be on the roads. I was well-off absolutely. So you know it was a trying time. But then there was a great dividend; the kind of bull market we had - 3000 to 21000.

Q: And you really rode it didn’t you? There are so many terms people use about you - The young tiger, pin up boy of the bull market, India’s Warren Buffet. Do you find it pointless? Do you find it flattering? How do you take it?

A: I don't know. I have learnt two things about the press and wives. When they something - don’t react.

Q: Are you the same guy that you were? Are you the same guy you were 15-years back?

A: Why are you asking me? Ask my friends, if I have changed in any way.

Peer View:

N Jayakumar, CEO, Prime Securitie says, "As earthy as it comes, he is as raw as it can be and he is as direct as it can hurt. He is all of this and I think at the end of the day it is not because he is a wealth creator, he is all of this, but he has been that since the time I have known him and he has just remained much of the same."  

Q: Is It tough to be tight with people from the same community - the stock markets? Can you be close to some one who is part of the same?

A: I am close to a lot of people from the stock market. Actually, my best friend and whom I consider my guru, Mr. Radhakrishna Damani - he is from the stock market. Actually he has taught me so much in life and we are the best of friends. We can discuss anything. We go on holidays together. We’ve done so many things together and my other friends - they are from the stock market. Also let me not pretend. I don't have much interest in life other than the stock market.

Did you know:

The name of Rakesh’s organisation is actually a combination of his initials and his wife’s initials. So, Rakesh plus Rekha equals RARE Enterprises. As Rakesh says, she is the only one he likes being answerable to.  

Peer View:

Samir Arora, Helios Capital says, " I am very impressed with Rakesh not because he has done so well in the stock market which itself is very impressive but to have done that without raising any controversy, without creating enemies, which is a problem in India for successful people." 

Q: You are very much into the individual behind the business. Who runs it and how well it is run. Tell me how carefully you look at that when you look at a business that you wanted to be a part of?

A: I look at the situation. I look at the possible outcomes and then I think what could be the outcome? For example, when I invested in Titan, my thinking was, can Titan become India’s largest specialist retailer? That was the question I asked myself. Will it always occupy a 50-60% share in branded jewellery? Will it always remain a leader in Indian watch industry? Will it enter into other areas of retailing? I asked myself all these questions and the answer I thought was yes.

So this is the basic analysis I did. Then I went to the office - Titan office was like a young advertising agency. So I thought marketing is in their blood. I met their management team including their Managing Director. I was thoroughly impressed by them. I took the decision. I put my life behind it. 

Q: What impressed you?

A: Their sheer approach. The Managing Director told me that the task is difficult. But we'll overcome it. We have to suck the capital and increase the profits and that's what they have done. So, when I take a decision there are three-four matters that I consider - opportunity. I am from the investment thought which says nobody can be bigger than the opportunity. Second, I look at the competitive ability. In a capitalist society, you cannot deliver product and make a profit unless you do it in a competitive manner and competitive does not mean the most expensive. Then I look at scalability. Scalability is very important. When I invested in Pantaloons, the biggest idea was can ten stores become five-hundred? It was written behind a Maruti -- when I grow will I be a Mercedes? Great are the challenges of scalability.

Then what I look at is valuation. It’s important what you buy. It is more important what price you buy. Somebody bought Hindustan Lever at an Index of 2900 - the price was Rs 320. When the Index was 7000 - the price was Rs 145.  You bought Hindustan Lever - best quality company, best pedigree and everything and I made lot of money by buying United Breweries and McDowell’s at a valuation of Rs 200 crore. There was no corporate governance. People told you you’re down the drain. I made five-times my money in two-years. 

Q: Sometimes there are tough lessons to learn as well? Just on the subject of valuations, you would be watching the media space and there are a couple of howlers over there by way of stock performance, for example, MiD DAY (Multimedia) - have there been more tough lessons to learn? 

A: Every mistake teaches you a lesson. There is always a risk in investing in midcap stocks because if they succeed, the gains are huge. If they don't succeed and scalability does not come, then the losses are also huge. I don't regret having invested in MiD DAY because I always allocate my assets and I don't do it in a planned manner. I don't put more than a certain percentage of my wealth in incomplete situations. So, I might have made a mistake. The decision is tough, but okay, the good comes with the bad. 

Peer View:

Atul Suri, Rare Enterprise says, "I have known Rakeshji for over five-years and I have traded on his behalf. I use technical analyses but not once has he interfered in a single trade of mine and that is very special. For a very accomplished trader to see a different approach in trading and not interfere with him and that really comes from the basic thing I have noticed in him is that he respects other disciplines also to the markets."     

Q: You're very patient, though?

A: What is the choice?

Q: The choice is to book out.

A: Well, its not that I’m not booking out because I’m afraid to take a loss. I’m not booking out because I still think there is reason to believe that things can change. 

Q: Were you surprised Rakesh - could anybody have seen where we are right now in January this year?

A: I have made presentations to show in October, that this is going to be an unprecedented fall. And I have reasoned out how much is the lending to subprime, and that this problem cannot be stopped by reducing interest rates. The American bull market has come to an end. It may be a long correction.

I’ve made these presentations in writing. I have them on record. I don't say I foresaw the failure of any particular organisation but I thought it'll be very tough and I didn't rule out in my mind that some organisations can fail. 

Q: Is there any question in your mind that we as well are in a bear market? 

A: In India?

Q: Yes.

A: What is a bear market, what is a bull market, I don't know. Numerically - surely, since we have broken the last lows that we had in August 2007, we'll have to term it as a bear market. But I don't think the long-term Indian stock bull market has ended. I think it’s in interruption mode.

This bull market is based on two factors. One is economic growth of India, which I think is based on factors that are irreversible, whether democracy, whether skills, whether demographics, whether cultural factors. They are irreversible. I think India’s economic growth will always trend upwards.

T

hen it is based on the platforms that we have created to attract money into the Indian markets -- the trading strategies, the regulation and the under-exposure of Indians to equity. I will surely say that it’s an interruption. How long? Nobody knows.

Q: You've been cautious, though, Rakesh, right till since last Samvat you've been striking a cautious note?

A: If the Index instead of going from 3,000 to 21,000 had gone from 3,000 to 13,000, and then back to 11,000 - would that not have been a bull market? Then it would have been termed a bull market correction. So at levels, where you saw the participation, the valuations, you saw what was coming in the Western world, you saw the sheer corporate greed in India; you saw the senselessness with which people in India just wanted to buy anything. They were all indicators - so what is wrong in being cautious?

Q: Are you feeling better about all those indicators? Do you think things have cooled down now?

A: I think now we've begun to reverse slowly. Now things will be overdone but that’s the way markets are. As I told you, markets are like the weather. Whether you like it or not, you have to bear it. 

Q: There is courage of conviction as well, to be a wealth creator? If someone were to sit you down and ask you, do you think that over the next five years, Indian equities is still the place where you'll see the most significant wealth creation, would you say yes?

A: I would think so, as far as Indian assets are concerned. I don't have much knowledge about global assets. My good friend Mr. Shankar Sharma has said, equity has one quality - it is always an asset which trends upwards. India will remain in a phase of very good economic growth for the next 30 years.

Q: Do you feel we will have to be a lot more patient with it though, this time around?

A: As I told you markets are like women, you have to be patient. 

Q: No, but you know we've had a fantastic run. We've had the mother of all bull runs in the past three years.

A: I disagree with you.

Q: You do?

A: The mother of bull runs is still to come

Q: Really?

A: In my opinion, yes. But it could start after one-year. It could start after eighteen-months or after six-months. But the next high and the next bull market will be far bigger and have far more participation and far more excesses than we had in the last one-year.

Peer View:

Ramesh Damani, Member, BSE says, "He is so free with his information. He will willingly share with you his ideas. He will willingly share with you his investment style or his thought processes with the market and there is almost leisurely number of young men or Turtles as we call them on the street who’ve benefited enormously and handsomely from his advice including myself. Earlier in my career he really helped open my eyes, showed me how to dream and allowed me how to take position with the market. So above all, we respect that - the ability to share that information in a business that is so secretive - he is an open book, always willing to help."

Q: Do you see a lot of people who are part of the stock market, returning back some of the wealth creation? I know that you have a Jhunjhunwala Foundation. You're actually actively part of a lot of NGOs and you donate significantly amounts over there. Is that an important part of being a wealth creator for you - to spread it as well?

A: I cannot forget my late father, who has never asked me ever that what is your wealth? The only thing that he would ask is how much charity have you done this year, and are you going to continue it or not? So, I’m making my own efforts towards some good social cause that I’m supporting. I’ve built a Home for 400 boys in New Bombay. God has given me one daughter and I’m going up 400 children. I cannot give them absolutely what I’ve given my daughter but I’ll send them to English medium schools. I’ll see that they have all the needs of life and I want to bring them to a stage where they can get good jobs and they can contribute back to the Home.

I think the greatest wealth is giving the person ability to learn. Then I’m supporting lots of causes with children like girls' education. I'm supporting other small causes for street children. We're building a temple in Lonavala. It is my target in life. This year by budget is Rs 10 crore, next year it should be Rs 12.5 crore and on my twenty-fifth wedding anniversary, which is on February 21, 2012, the gift I want to give my wife is - I’m going to give Rs 500 crore to her foundation.

Q: Is this a bigger high than being part of the stock market?

A: I don't think it is a high. It is a duty. To donate and to help others are very good attributes.

Urmila Jhunjhunwala, Rakesh Jhunjhunwala’s Mother says, " When he was a little boy, whenever our friends used to come, he used to tell them which shares are good to buy.

Rekha Jhunjhunwala, Rakesh Jhunjhunwala’s Wife, says, "I think the market is only first priority for him. His first wife is only market. When he started, he had nothing, absolutely nothing. Everyone used to say, what will you do in stock market? But he wanted to do that only."

Q: What's your biggest faith?

A: Myself. I am confident of myself and I don’t rely on anybody.

Q: What's the big dream for Rakesh Jhunjhunwala - the wealth creator because we have had entrepreneurs who say I want my business to go to XYZ level, I want my turnover to double, triple, four-times?

A: I have two-three dreams in life. The first dream is that when I die and only truth of life is death, how many people come to my funeral and say, a good man has died. That is the greatest ambition in my life. Second thing is I want to earn the greatest wealth of the world in the most legitimate manner; practical legitimate manner and leave the largest part of it to charity.

Rapid Fire:

Q: Favourite trade - long or short?

A: Long.

Q: Rank the following companies on a scale of 1 to 10:

Q: Reliance.

A: I would rank it 2.

Q: Infosys

A: 1.

Q: RNRL

A: 9.

Q: Titan.

A: 8.

Q: Answer the following questions with just bullish or bearish:

Q: Crude.

A: Bearish.

Q: Gold.

A: Neutral.

Q: The S&P 500.

A: Bearish.

Q: The Indian bond market.

A: I expect the yields to go down. I am bullish on the bond market.

Q: The Nifty 50

A: I am bullish.

Q: If you weren’t a man of the market, what would you be?

A: I never think about it because being man of the market is so good and exciting.

Q: The worst advice someone has ever given you about the market.

A: You can never earn money in the market. You will go bankrupt.

Q: And the best advice someone has ever given you about the market.

A: Be careful. Be responsible. It’s fire.

Q: You have told me what you want to be remembered as. But what's the one piece of advice you would give someone who wants to get into the stock market?

A: First advice is respect the market. Have an open mind. Know what to stake. Know when to take a loss. Be responsible.

According to the latest figures issued by the government of India, the amount of advance tax collected from the top twenty five corporate assessee advance tax payers has shown a rise of slightly more than 27% in the collections.

Most corporates in the country pay their taxes in four installments, with the first being paid by June 15 every year. The first installment comprises around 15% of the total tax that the company envisages it will pay at the end of a fiscal year. The other installments are paid in the months of September, December and March.

According to the figures, the country’s largest public sector undertaking and premier oil exploration firm retained its position as the top tax payer in the country followed State Bank of India, the country’s largest bank. State Bank of India, the country's largest public sector bank, recorded a 31.81% increase in advance tax payment to Rs 663 crore for the April-June period this fiscal as against Rs 503 crore in the corresponding quarter last year. SBI has been among the top five tax payers in the country for at least five years. The bank had paid Rs 3,709 crore in tax during 2007-08.

Ratan Tata promoted Tata Steel was the highest private sector corporate assessee in the list but the steel major stood at the sixth position after paying 61.82% more than how much it paid in the same period last year. The firm is the only steel company in the list while telecom major BSNL is the only telecom firm in the list of top twenty five advance tax payers.

In seventh position stood Mukesh Ambani promoted Reliance Industries paid Rs 340 crore for the quarter April to June 2008 showing a 15.25% rise in advance tax paid for the period as compared to the same period last year where the behemoth paid Rs 295 crore. The total tax paid by RIL last fiscal was Rs 3,552 crore.

ICICI Bank was the second highest banking firm in the list but stood eighth in the overall corporates paying advance tax.

The bank saw a 36% increase in outgo for the period April-June 2008 over the same period a year-ago. The bank paid Rs...

340 crore against Rs 250 crore for the corresponding period last fiscal and paid Rs 1,108.6 crore for the whole of last fiscal.

Mining firm Sesa Goa showed a 315% increase in the advance tax paid for the first quarter, the highest among all the top twenty five firms listed. The company paid Rs 166 crore for the first quarter of 2008 as compared to Rs 40 crore for the same period last year.

Courtesy : http://www.financialexpress.com/news/Advance-tax-payers-paint-a-rosy-picture/326522/2

This trend is contrary to what was seen last year, and hence, raises many questions including FIIs current perception about India, the money they are willing to put back in Indian equities (if at all), their concerns on Indian markets, its relative valuations, economy and sectors.

Cameron Brandt, senior global markets analyst with Emerging Portfolio Fund Research (EPFR), a US-based firm that tracks the fund flows and allocations domiciled globally with $10 trillion in total assets, has answers to many of these questions and shares it with Jitendra Kumar Gupta. Excerpts:

Can you share with us the general FII sentiment towards Indian equity markets with regard to valuations and risks?

Risks, which were submerged by the tide of liquidity that flowed into emerging markets between 2003 and 2007, are reasserting themselves, forcing FIIs to reassess nearly all the markets they have exposure to. That includes India. There have been signs of late the balance of FII opinion is swinging in India's favour.

Indian companies are relatively debt free compared to their regional peers, most of the blue chips have been hitting their earnings forecasts, the Reserve Bank of India was quite quick off the mark in terms of getting to grips with inflation and leaner times in the US spells opportunity for the IT and outsourcing sectors.

What are the concerns that are common among the foreign investors regarding the Indian equity markets?

Three issues– oil prices, inflation and impending elections – stand out. The three are clearly linked. It is in the government's political interests to minimise the immediate pain that will come from higher energy prices and the attendant jump in both prices and interest rates.

But, such an approach has long-term consequences for public finances, India's credit ratings and the prospects for additional economic reform.

In an ideal world, the government would leave as much to market forces as it could and voters would reward it for doing the right thing by strengthening its mandate for additional reforms.

In the real one, the poor must be protected, both on moral and political grounds, and even the modest adjustments to fuel prices made this month increase the odds of a less market-friendly government by 2Q09.

Post January 2008, FIIs have been the net sellers in the Indian equity markets. What is your outlook for the rest of the year?

After a rocky start to the year, the India Country Funds we track, whose mandates are limited to Indian equities or cash, had posted net inflows for the nine consecutive weeks ending May 28. Year-to-date flows stood at $74 million versus outflow of $745 million at the end of 1Q08 and outflow of $1.1 billion during the same period in 2007.

Looking at the numbers from the fund perspective, GEM funds are slightly underweight on India, but continue to cite it as a good long-term bet and buy on dips – EPFR Global-tracked funds were net buyers of India in March when they were aggressively selling in most other Asian markets.

Global Fund managers are the most consistently bearish towards India: through April they had been net sellers of Indian equity for six straight months.

Last year, India Country Funds ended the year with net outflows of $761 million and EPFR global-tracked funds were net sellers of Indian equities to the tune of $853 million. If the current fund and country flow trends hold up, the comparable numbers for 2008 are likely to be positive.

Any particular Indian sector where foreign investors are bullish or bearish in the near-term?

The bullish case for IT has been helped by 1Q08 earnings and the perception that US businesses are looking for further ways to cut costs and boost productivity. There is also lot of bullish discussion about the public and private money going into India's infrastructure, although there is much less consensus about how best to play this theme.

Are FIIs worried with regard to the Indian corporate earnings under pressure, if so, what are the issues that will impact the earnings going forward?

The cost side of the equation is clearly under pressure from energy and commodity prices, the demand for skilled labour and infrastructure constraints. But, earnings expectations currently seem to be pitched at the low end of reasonable, so things will have to really go sour for them to trigger a serious flight of FII funds.

In the minds of FIIs, does the Indian equity markets still holds as long term growth story?

Yes. The past six months has shown that there is real domestic support for those markets and India's underlying economic story remains a good one: robust investment in capital goods, a central bank showing real independence, human capital returning and private enterprise playing a growing role in more and more sectors.

Do you perceive government interventions as a political risk and how do investors react?

It's a question of degrees. Most FIIs realise that triggering food riots, sending inflationary expectations soaring and improving the chances of political parties hostile to free enterprise is a high price to pay for economic orthodoxy.

So, they are willing to live with these measures, and the short-term impact they will have on specific sector earnings, as long as they feel the government is using the time these measures buy to come up with better solutions.

Is there is a change in FII perception regarding investing in the mid- or large-cap Indian companies? Has it changed during the recent past?

There's more awareness that the best value at the moment may lie in mid-caps. But, there isn't much indicating that these investors are digging into the universe of India's second/third-tier firms.

How are foreign investors looking at the rupee's depreciation? Where do you see the rupee over the next one year?

It's not an issue the funds we track are talking about. I suspect that tightening monetary policy and rising oil prices will largely cancel each other out, leaving it roughly where it is at year's end.

Was it the redemption pressure that led to the withdrawal of foreign money from the Indian markets or they are sitting in cash?

It is more a case of moving cash to the sidelines than redemptions. Since the beginning of last year, over $300 billion has piled up in the money market funds we track, with $125 billion of that flowing year-to-date. Net outflows year-to-date from GEM, Pacific and Asia ex-Japan Funds (which include India country funds) stand at $11.7 billion.

What are the near-term global cues that the FII investors are waiting for before committing fresh investments?

Stable oil prices and full discovery of the sub-prime assets in the world's financial system. Both of which, we feel are unlikely to happen much before 2H09, suggesting India will see another 6-9 months of cautious, sector and company-specific FII flows.

Courtesy : http://www.business-standard.com/common/news_article.php?autono=326769&subLeft=0&chkFlg=Q&A 

Courtesy : http://economictimes.indiatimes.com/articleshow/3155034.cms