Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
FIIs Risk-Return Tradeoff - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 29, 1999

    FIIs Risk-Return Tradeoff

    A study, undertaken at equitymaster.com, to estimate the gain in the portfolio values of FIIs between the 1st of March and 22nd of July 1999 has produced remarkable results.

    The FIIs, which had portfolio investments to the tune of US$ 6.4 bn on the eve of the presentation of the Annual Budget, have seen the value of their portfolio grow to US$ 9.1 bn on the last day of the study. This translates into a gain of 42.2% for the period and 155% if taken on an annualised basis. Gains on the incremental investments of US$ 739 mn from March to July amounted to US$ 139 mn, taking the total gain to a whopping US$ 2.8 bn during the period. As the data on the investments made by FIIs is not available, the gains were estimated by assuming that the returns were perfectly correlated to the returns on the BSE Sensex.

    The period under study commenced on a positive note as the annual budget, which had drawn rave reviews, led to the BSE Sensex appreciating by 17% from its pre-budget close to a level of 3,784 within the next 11 trading sessions.

    The stock markets had just begun to consolidate its post budget gains when the Indian economy suffered a by-now-familiar jolt - political uncertainty. This uncertainty culminated with the dismissal of the BJP led coalition government in mid April. The stock markets retreated drastically as the fate of the much-admired Finance Bill became uncertain. The subsequent passage of the Finance Bill however did bring some respite to the markets.

    Subsequently, the markets were flooded with news of the signs of economic recovery -increase in the non-oil imports and non-food credit. The increase in cement dispatches and commercial vehicle sales too lent support to this view. The market rallied behind the news to touch a high of 4,124 on the 19th of May.

    Jinxed, as it may seem, the rally was disrupted by the abrupt break out of tension on the Indo - Pak border. The war-like situation, which at times threatened to escalate into a full-scale war, ended when a cease-fire was declared on the 12th of July. Despite the war-like situation, the sensex registered a gain of 15.5% from the start to finish of the Kargil tension. This bull run was led by the FIIs, which kept pumping money into Indian markets, on the back of the good economic numbers.

    The sensex continued to post gains after the cease-fire was declared to close at an all time high of 4,729 on the 22nd of July. The sensex had gained a stupendous 34% since the 1st of March, despite the political crisis and the war-like situation at Kargil.

    What, however, makes this performance of the FIIs creditable is that they continued to pump in money into Indian stocks despite the prevailing tensions. It is for this enormous risk which the FIIs took that they have been proportionately rewarded.



    Equitymaster requests your view! Post a comment on "FIIs Risk-Return Tradeoff". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working (Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    The Key Factor Pushing Gold Up These Days (Outside View)

    Aug 21, 2017

    PersonalFN explains the chief factor pushing gold prices up of late.

    How Unique Are the Companies You Invest In? (The 5 Minute Wrapup)

    Aug 21, 2017

    One of the hallmarks of successful investing is to look out for companies that have a unique and enduring moat.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 21, 2017 (Close)