FIIs sell Rs 1000 cr equities in 2 days

Foreign institutional investors (FIIs), the biggest driver for the stock markets over the last four months, continued to sell equities for the second day on Monday, taking their net sales figure to Rs 1,000 crore.

According to figures put out by the Bombay Stock Exchange and the National Stock Exchange, FIIs continued to be net sellers for the second day in a row- for the first time since the markets entered rarefied territory nearly three-and-a-half months ago.

According to Monday's data posted on both NSE and BSE, FIIs further sold equity worth Rs 565 crore on Monday, taking the figure over the last two trading-days to nearly Rs 1,000 crore. According to BSE data, FIIs have been net sellers in April of more than Rs 1,100 crore.

The data also showed a decrease in FII activity at the two bourses- a drop of nearly 40 per cent in turnover from Rs 6,800 crore on Friday to nearly Rs 4,166 crore.

"We are at a very high altitude," says A K Sridhar, chief investment officer at UTI AMC, who expects the markets to remain very volatile over the next few days, "where even a breeze may feel like a wind. We are in a very volatile zone where you cannot avoid bouts of panic selling."

There are others, however, who believe that even if the current sell-off leads to a correction, the returns are likely to be stable, if not positive, over six months to a year.

"We tend to assume that FIIs are a homogenous group and that they act in concert," says Shashi Krishnan, CEO of Cholamandalam AMC.

"While there would be many who are satisfied with the 73 per cent return they got over the past one year and decide to book their profits, there will also be a lot of foreign investors who have a 'missed-the-bus' feeling towards India and who will step in the minute there is a large enough correction." Rajat Jain, Chief Investment Officer of Principal PNB, too agrees.

Jain expects a churn, rather than an exit by FIIs. "There are different types of foreign institutions who have come to India, including hedge funds, pension funds and dedicated India funds and their investment needs are different," he explains.