FII inflows may cross $10 billion...

forget volatility.......forget the market at an all time high...forget fair(read stretched valuations)..'07 may turn out to b a bumper year for india in terms of foreign institutional investments.....we may see a slowdown in FII flow for the first half of the year,but since macro-economic parameters-which are the key drivers of robust corporate earnings growth-are still intact,FIIs will continue to plough money into india..FII flow into india will continue as the economy is doing extremely well.redemptions may occur at higher levels but new money will be pumped in at every correction

some important issues leading to FIIs bullishness are :

continued growth of second-rung companies

stable world economy

softening commodity prices including crude oil

domestic growth story

unless the world economy led by US undergoes a recessional phase ,emeerging markets will continue to be hotbeds of FIIs

as china and india are the key drivers,more money will flow into these two economies discounting valuations,inflation and currency risks as per report by Merrill Lynch

Each time sensex crosses a new milestone,there are fears whether the rally has run too long......however,so far, there has not been any abatement in FII flows...this is because india growth story continues to remain strong....in FY07,net profits of india inc. will grow faster than in FY06
in the past few months ,we have seen occasional bouts of FII selling,but each correction sees 'cherry-pickers' pump in more money.......the reason is strong underlying growth.....with nominal GDP growth at 14%,corporate net profits can easily touch 20% or more....