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FIIs watch scene cautiously

Foreign institutional investors and international consultancy firms have adopted a cautious approach in light of the deep concern expressed by various foreign nations over the nuclear explosions made by India yesterday.

A majority of them expressed their inability to make any comments on the issue but felt that this certainly would slow down the inflow of foreign investment into India, particularly if major nations go on to impose trade sanctions against India.

"We are adopting a wait-and-watch attitude towards the whole issue and suggested to our foreign clients watch the developments closely," said a senior manager from a leading foreign institution.

Sanjay Vaid, chief dealer at the FSKI Securities, said that most of the foreign institutional investors have decided to hold their market support for quite some time and are presently waiting for the initial reactions from the United States and leading western countries. "If they take stringent action against India for conducting the nuclear tests, then we will have to reconsider further investments," he said.

He said the FIIs decision is for a temporary period and they would participate in the market in the next week.

Vaid did not link the FII's sales in the markets to the explosions. "Some of the FIIs might be having long-term positions and are therefore engaged in a selling pressure," he pointed out.

Share prices on both the Bombay Stock Exchange and National Stock Exchange fell sharply following selling by foreign institutional investors and speculators across the board. The BSE Sensex nosedived by 77.7 points or 1.91 per cent to 3917.90 points while the NSE-50 Nifty also dropped by 28.05 points to 1132.25 points as against the previous close of 1160.30 points.

Commenting on the bearish phase on the bourses, BSE chief J C Parekh said, "This is an initial reaction from the market participants, fearing the stoppage of financial aid by European countries, and some sanctions by united states, but the market will pick up soon, he said.

meanwhile, most of the leading Indian global depository receipts listed at the international market also reported sharp decline today. The losers were Arvind Mills, Ashok Leyland, Bajaj Auto, Bombay Dyeing, BSES Ltd, Cent Textiles, East India Hotels, GE Shipping, Indian Alum, Reliance, State Bank of India, Telco (1st), Telco (2nd) and Videocon.

UNI