FIIs have pulled out $1 billion since Budget

FIIs have pulled out $1 billion since Budget
The Times of India, July 14, 2009, Page 19

TNN, MUMBAI

Foreign institutional investors (FIIs) have withdrawn over $1 billion from the stock market alone since the Budget was presented on July 6. To some extent, this huge selling has pulled each of BSE sensex and NSE nifty down by 10% during the same period. Although during the same period, domestic institutions — that include insurance companies, mutual funds and banks — have net bought stocks worth nearly $900 million, but this buying has failed to cushion the selling foreign funds, market players said.

Data released by BSE and NSE showed that between July 6 and July 13, FIIs have net sold stocks worth Rs 5,241 crore, or nearly $1.1 billion at current exchange rate, while domestic institutional institutions (DIIs) have net bought stocks worth Rs 4,406 crore.

This data, however, differs from the FII numbers released by Sebi which shows a net inflow during the same period. The difference is because the Sebi data also includes stocks bought by FIIs through the QIP and public offers, buybacks and also investments in unlisted companies, experts tracking FII/DII investments said.

So in six trading sessions, on an average FIIs withdrew about $180 million from the market each day. As a result, institutional dealers pointed out the rupee has depreciated against the dollar: From 47.89 on July 3, the last trading day before budget, the Indian currency is down at 49.08 now.

Although it is mainly the FII selling that has pulled the markets down since Budget, the FII index has fallen less than the sensex and the nifty. Compared to the 10.1% fall in these benchmarks, Instanex FII index has lost 9.7%.

“Although there have been strong selling by FIIs, the relative outperformance of the FII index signals that the market could soon bounce back,'' said Gautam Chand, chief executive, Instanex Capital. The company manages the sole FII index available in the Indian market.

Soon after the Budget, institutional dealers had said that FIIs with long-term investment mandate were awaiting further signals from the government on its economic policies.