Rs 65000 crs Domestic liquidity in H2FY09

I did an estimate of the potential money which can be invested in the markets over the next six months by the domestic investors.

Rs 6817 crs which investors will receive from the open offer from Daichi to Ranbaxy shareholders. Hopefully, greater portion of the amount should come back in the market.

Rs 15,000 crs cash lying with the Mutual Funds

Rs 40,000 crs can be invested by the Life Insurance companies. Note that Q3 and Q4 are normally the best time for the industry.

Rs 3,000 crs can be invested by the Banks and Financial institutions.

Then there is funds which might be invested by the retail investors directly, Venture capitalist/PE players buying through secondary markets, pension fund money and Promoters increasing their holdings through open market puchases. All this should ensure that the downside is limited with FII’s continuing their selling spree. My sense is that FII inflows should resume by the end of Q4FY09 as global situation improves and risk appetite returns towards equities.

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3 responses to “Rs 65000 crs Domestic liquidity in H2FY09

  1. Here , you have given some valid points and all that you say will have positive impact and down the line you will see markets rebounding for the money supply in market if not for any thing else. Much more money is pumped in by RBI since your post was written.

  2. It seems like Domestic life insurers will end up investing around 25,000crs in equity markets in second half of FY09.

  3. Mutual Funds were sitting on Rs 18,452 crs cash at the end of Nov’08. I wonder how much has been invested in this month till date as markets have rallied more than 10% since then.

    On the FII’s front, have Norway Sovereign Fund invested $2bn in Indian stocks ??

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