FII inflows hit all-time high

Foreign institutional investors (FIIs) turned net sellers on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in the current calendar year so far, while net inflows in the current calendar year, according to the Sebi data, have been at an all-time high of Rs 66,800 crore.

The category-wise turnover data by BSE and NSE, according to the client code or the client type, show net outflows of Rs 2,656 crore, while the data collated by Sebi show net FII inflows of Rs 66,800 crore.

The huge gap between the two figures is because of the compilation of FIIs inflows. The Sebi definition pertains to all activities undertaken by FIIs in the Indian securities market, including trades done in the secondary and primary markets.

The FII purchase and sales data compiled by Sebi show the aggregate purchases at Rs 7.97 lakh crore and sales at Rs 7.30 lakh crore, with the purchase netting to Rs 66,800 crore. BSE and NSE show aggregate purchases of Rs 7.28 lakh crore and sales of Rs 7.31 lakh crore, with the sales netting to Rs 2,656 crore.

FIIs were net buyers of Rs 18,854 crore on the secondary markets till October 2007 and turned net sellers, leading to outflows of Rs 13,689 crore in November and Rs 7,825 crore in the current month so far.

FIIs have been net sellers in the last two months to make up the losses on account of the US sub-prime defaults. The secondary market inflows also dried up on account of the ban on fresh investments through participatory notes (P-notes) by Sebi last month.

The FII inflows into the primary market compiled by the Business Standard Research Bureau indicate that the net inflows came through the conversion of foreign currency convertible bonds (FCCBs), private placement to qualified institutional placements (QIPs), initial public offers (IPOs), follow-on overseas offers and preferential offers.

Out of the total net inflows in 2007 so far, a whopping 70 per cent or Rs 47,001 crore were invested through three instruments "" FCCBs, QIPs and IPOs. The remaining 30 per cent were invested through overseas offers, preferential offers and conversion of warrants.

FIIs preferred the primary route largely on account of attractive valuation in the primary issues, says Sudip Bandyopadhyay, the director and CEO of Reliance Money.

Some FIIs are booking profits in the last few months to compensate for losses in other markets and some others are selling it to give dividends and bonus to their investors.

Deven Choksey, the director of Kisan Ratilal Choksey Shares and Securities, said, of late, FIIs had been net sellers in the Indian markets to make up losses in the other markets.