Foreign funds turn net sellers for first time in 25 weeks

Sunday, November 21, 2010

MUMBAI - Foreign funds sold stocks worth $88 million this week, a first in about 25 weeks, sending strong signals of consolidation at Indian equities markets for the coming sessions.

While the flow of overseas money has swelled to record levels, recent weeks have also seen stocks tumble, soon after benchmark indices soared to their highest levels.

According to data available with the Securities and Exchange Board of India (SEBI), foreign institutional investors (FIIs) were net sellers to the tune of $88.29 million for the week ended Nov 19, a first since the week ending May 28.

In fact, FIIs sold scrips worth $2.39 billion in May.

However, since then, foreign funds had steadily increased their buying appetite for Indian equities. The inflow of overseas money stood at over $28.59 billion when the markets closed Friday.

The consolidation may also be a result of the political turmoil over the 2G telecom spectrum scandal, which has stalled parliamentary proceedings for over a week.

Markets witnessed extremely volatile trading this week after the country’s top audit agency Comptroller and Auditor General (CAG) said A. Raja, then the communications and IT minister, had arbitrarily allocated 2G spectrum, causing a presumptive loss of Rs.1.76 trillion ($40 billion) to the exchequer. Raja has since resigned.

Sensex, the 30-share benchmark index of the Bombay Stock Exchange, ended the week at 19,585.44 points, down 2.84 percent or 571.45 points from the previous week. The Sensex plunged 345 points Friday in late-hour panic selling.

At the National Stock Exchange (NSE), the 50-share S&P CNX Nifty closed the week at 5,890.30 points, a low of more than two months. The index slumped nearly two percent Friday, taking the weekly decline to 181 points.

Filed under: Economy

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