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Even when foreign institutional investors (FIIs) flood Indian IPOs with billion-dollar bids, they aren’t really making much money, said Samir Arora, founder and fund manager at Helios Capital Management. In a post on X (formerly Twitter) on Friday, Arora argued that despite headline-grabbing oversubscriptions, “FII investors don’t really make any serious money,” citing currency conversion losses, funding costs, and the mechanics of allocation that erode returns.“It is pertinent to point out that when in an IPO the FII quota is oversubscribed 100 odd times, FII investors don’t really make any serious money,” Arora said. “This is because on a bid of 100 dollars he will get shares worth 1 dollar. If that stock goes up 40% he makes 0.4 dollars on a 100 dollar bid.”Arora explained that the economics get worse once currency conversions are factored in. “When FII puts in a bid of US$100 he has to convert US$100 into INR and then convert back US$99 worth of INR back to US$ and that will take away around 0.2,” he said. A further weakening of the rupee, he warned, could wipe out any notional profit on the allocated shares.For context, the Indian rupee has been hovering near its record low for most of this week at around 88.6850 per U.S. dollar. Meanwhile, the dollar index rose more than 1.5% for the week, its strongest showing since November 2024.Borrowed money, shrinking marginsAdding to the pressure, most foreign investors don’t keep idle cash on hand for such bids. “Also few FIIs have US$100 lying around in cash so they normally borrow that money for 4-5 days and have to pay financing cost on that (or give up on the interest for that period),” Arora noted.He added that while hedge fund managers track these expenses meticulously, many traditional long-only fund managers “don’t even know all the costs they incur when they ask their back office to make these bids so life goes on.”Arora’s comments come amid a flurry of big-ticket listings in India’s primary market. LG Electronics India’s IPO saw an eye-popping 54.02 times subscription this week, while Tata Capital’s public offer drew bids worth $1.24 billion, underscoring the strong global appetite for Indian equities despite tight valuations and a volatile currency.Also read | Explained: Reliance Industries is India’s most valuable company but why isn’t it No.1 in Nifty50 weight?(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

Afghan Foreign Minister Amir Khan Muttaqi on Friday said Kabul will send diplomats to India as part of step-by-step efforts to improve bilateral relations.Muttaqi made the significant announcement at a media briefing hours after holding extensive talks with External Affairs Minister S Jaishankar.He also assured New Delhi that Afghan soil will not be allowed to carry out any activities that could be detrimental to its interests.Muttaqi said Kabul will soon send its diplomats to India. Till now, the Afghan missions in India have officials who were largely appointed by the previous Ashraf Ghani government.India has not yet recognised the Taliban set up and has been pitching for the formation of a truly inclusive government in Kabul.

"Why are companies outside India so concerned about how we conduct our affairs?" the Supreme Court asked on Friday as it dismissed a PIL seeking a probe into allegations by a US-based short-seller against Vedanta group firms. A bench of Justices P S Narasimha and A S Chandurkar dismissed the PIL filed by a lawyer called Shakti Bhatia as withdrawn after senior advocate Gopal Sankaranarayanan said he will be withdrawing the petition. "Why are these companies outside India so concerned about how we conduct our affairs and under what law?" the bench asked after Solicitor General Tushar Mehta, appearing for the Centre, Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) said Viceroy Research LLC was a short-seller and the petitioner is just a "name-lender". Mehta pointed to an email written to SEBI chairperson and other authorities by Viceroy just after the petition was filed in the apex court and said these institutions have absolutely "no credibility". "There is a systematic pattern where outside agencies create reports and influence the Indian stock market," he said.Sankaranarayanan submitted that the relief sought in the petition is very narrow and only seeks that SEBI and RBI investigate the allegations and take necessary action. Sankaranarayanan also said he does not endorse the allegations levelled by the Viceroy nor the methodology adopted by the petitioner but wants to allay concerns, and the SEBI can very well investigate the irregularities pointed out and take lawful action. The bench said if it issues notice and seeks their counter affidavit, it will dismiss the petition with a huge cost. Sankaranarayanan said this petition does not call for such sweeping reliefs, unlike the Adani-Hindenburg litigation where the apex court had constituted an expert panel. Mehta questioned the maintainability of the petition and pointed to the modus operandi of foreign short-sellers. He said such firms seek to destabilise Indian companies and markets by releasing reports and then amplifying their effect through litigation. "The highest court of the land cannot be taken for a joyride. Let this petition be dismissed to send a strong message," Mehta submitted. The bench said since the petitioner is seeking to withdraw his PIL, the court would not like to go further into it. Earlier, two judges-- Justices Sanjay Kumar and K Vinod Chandran of the apex court -- had recused themselves from hearing the matter. Viceroy Research LLC is an investigative financial research group registered in Delaware, US, and recently made certain allegations of financial irregularities against Vedanta Limited, Vedanta Resources Limited, Hindustan Zinc Limited and related entities. The petitioner Shakti Bhatia, a lawyer by profession has moved the apex court claiming that he has independently corroborated portions of the Viceroy's allegations and sought probe by regulatory agencies like SEBI and the RBI.