Of the total amount that foreign institutional investors have invested in India in 2004 so far, almost 43 per cent or around $2.3 billion has been through subscriptions to IPOs and secondary offerings.

The large number of quality issuances, including those of ONGC, NTPC and TCS, has prompted them to pick up big chunks in these companies.

Till November 11, FIIs had picked up Rs. 27,948 crore (about $6.07 billion) worth of stocks compared with Rs 23,716 crore (about $5.15 billion) in the corresponding period of the previous year.

While investments have already the crossed $6 billion mark in 2004 so far -- as against $6.6. billion in 2003 -- their overall share of market capitalisation has gone down, thanks to the low free float of TCS.

Thus while FII participation in forthcoming IPOs is expected to remain strong, their percentage share could continue to fall because of the low market capitalisation of many of the issuing companies.

However, there is a difference in the investment pattern in that the number of qualified institutional buyers that have made investments in 2004 is significantly higher.

According to Ravi Kapoor, executive vice-president, DSP Merrill Lynch, compared with just 60-70 QIBs that had participated in Indian IPOs in 2003, over 270 QIBs had put in bids for the TCS issue, many of them investing for the first time in India.

In fact, the NTPC issue also saw some new FIIs participating, with the bids reportedly totalling $5 billion, nearly ten times the amount reserved for institutions.

While IPOs like TCS and ONGC have attracted institutions because of their quality and size, there is another category of smaller QIBs that have been buying into the Indian market.

Market watchers say that several FIIs are willing to pick up equity in companies with a market capitalisation of below $1 billion and some are even buying stakes in small-caps with a capitalistaion of $50-$100 million.

The differing investment preferences have resulted in a more broad-based set of investors and brought depth and stability to the Indian stock market, just as the hedge funds have imparted liquidity, "observes a salesperson with brokerage.

He adds that "while some funds are looking for deep value, others are looking for value, some for growth and some for arbitrage."

In fact, the markets have remained stable despite that the fact that some big funds have been paring their exposure to India.