FIIs bank on RBI’s Rajan, buy shares worth $1 bn in 8 days: Deutsche Bank

Foreign Institutional Investors (FIIs) have mopped up shares worth $1 billion in the eight trading days following RBI governor Raghuram Rajan's announcement of lifting of all controls on capital flows, Deutsche Bank said in a report.

FIIs have ploughed back 25 per cent of the entire outflows of June-August 2013 during the past eight days after Rajan's announcement easing all curbs on the movement of capital, according to the German financial services major.

During the June-August 2013 period, the country saw foreign fund outflows around $4 billion from the capital market, the sharpest since the global financial crisis.

"Following incoming governor Raghuram Rajan's announcements on assuaging currency markets and particularly after the news flow over the FCNR-B swap announcements, we have seen the rupee partially recovering its losses and FII's emerging as net buyers of close to $1 billion over the past 8 trading sessions," Deutsche Bank said.

According to the bank, the recent announcements over the FCNR-B, supportive trade data and moves for investment facilitation in debt markets have helped boost investor sentiment, the bank said in its report.

Deutsche Bank said the easing of tensions over Syria risk have also assuaged investors, aiding inflows.

RBI's measures to ease capital curbs have to be supported by long-term measures for financing the country's current account deficit, it added.

Investors are also keenly awaiting a fuel price hike, which reflect a "convergence of political will on critical economic issues also bodes well," according to the bank.

The capital market's optimism was also reflected in the rupee's value, which improved to levels close to 62 per dollar from its all-time low of 68.85 a dollar hit on 28 August.