Markets have never received a mightier punch from global factors before Monday when the Sensex recorded the third biggest fall in the history, with foreign institutional investors selling shares worth Rs 7,373.60 crore (Rs 73.736 billion) in just three days.
Monday's sharp downslide came on the back of expectations that the foreign investors might consider moving away their funds from the emerging markets following signals of further rate hikes by the US Federal Reserve.
Other global factors such as sharp meltdown in the metal prices and weakness across the worldwide equity markets also contributed to the heavy selling pressure on the domestic bourses.
According to the data available from the Securities and Exchange Board of India, FIIs were net buyers in Indian equities on two days during the three-day plunge on the bourses.
While FIIs were net buyers of shares worth Rs 322.90 crore (Rs 3.229 billion) on May 11, they sold shares worth a net of Rs 1,199.10 crore (Rs 11.991 billion) on May 12.
The three-day slide on the Sensex had begun on May 11, when the 30-share barometer index had shed 177 points, followed by a 150 points fall on the next day.
On Monday when the Sensex nosedived 463 points to mark the third biggest fall in the history and the biggest fall since the 565-point slide on the previous Black Monday May 17, 2004, the FIIs were marginally net buyers of Rs 18.60 crore ($4.1 mn).
FII inflows have been among the major factors behind the recent upsurge on the bourses which has seen the benchmark Sensex breaking into uncharted territories on a regular basis, the market observers believe.
FIIs made total gross sales of Rs 7,373.60 crore in three trading sessions from May 11-15 and purchased shares worth a gross of Rs 6,516.10 crore (Rs 65.161 billion) in the same period.
FIIs were net sellers of Rs 848.60 crore (Rs 8.486 billion) in the three trading sessions.
FIIs have made net purchase of Rs 2,586.70 crore (Rs 25.867 billion) so far this month, while the total figure for 2006, as on May 15, stood at Rs 21,062.90 crore (Rs 210.629 billion).
Foreign institutional investors were net sellers of shares worth Rs 1,140.10 crore in the month of May last year.
Emergence of India, Inc growth story on the global platform and lower interest rates in the US and other global markets have been instrumental in attracting the global institutional investors to the high-yielding Indian equity markets in the recent past, the marketmen said.
The net FII inflow surged past the $10 billion mark in 2005, from nearly 8.5 billion in the previous year.
The number of registered FIIs in India has also grown considerably in the recent past, with more than 200 FIIs entering the Indian market over the past one year. The total number of FIIs stood at 909 as on May 15, as against 699 on May 13, 2005.
In addition to the jump in the number of FIIs, they have also expanded their portfolio in the recent past and it also consists of numerous mid-cap and small-cap scrips in addition to the blue chips, the market observers said.
FIIs have been net buyers in Indian equities in each month over the past one year from May 2005 to April 2006 except for two occasions - i.e. the months of May and October in 2005.
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