USD 11.2 bn FII inflows expected in second half of fiscal: CMIE

FII inflows are expected to get stronger in the second half of this fiscal at USD 11.2 billion, Centre for Monitoring Indian Economy (CMIE) said in its monthly review.

"FII inflows are expected to get stronger in the second half of this fiscal at USD 11.2 billion as large FIIs like JP Morgan, Morgan Stanley and Deutsche Bank have started looking at India as a good long-term investment destination," CMIE said.

The unveiling of a fresh package by the European Central Bank in September 2012 for easing the European debt crisis is also expected to help reduce global risk aversion, it said.

"We expect net FII inflows in FY 2013 to be around USD 14.7 billion," it added.

The FDI inflows during the year are also expected to remain healthy at USD 20.8 billion, CMIE noted. CMIE expects the situation to improve going forward.

Current account deficit is expected to reduce a bit in the remaining quarters and capital inflows are expected to pick up. A major improvement is expected to be seen in FII inflows.

The reduction in global risk aversion following the announcement of new measures by the ECB, near zero interest rate regime in the West and high interest rates prevailing in India are expected to lead to an increase in external commercial borrowings to USD 11.4 billion in FY 2013 from USD 10.3 billion in FY 12.

It is expected that the net inflows of NRI deposits will increase further to USD 12.4 billion from an all-time high of USD 11.9 billion in FY12.

With zero interest rates prevailing in the US and Europe, Indians abroad are expected to invest more aggressively in NRI deposits, it said.