Written by: ENS Economic Bureau
2 min readMumbaiNov 25, 2011 01:15 AM IST
First published on: Nov 25, 2011 at 01:15 AM IST
Domestic financial institutions FIs were big buyers in the last three days when the stock market was under pressure from a depreciating rupee and selling by foreign funds. Domestic FIs bought stocks worth Rs 3,000 crore during the period,preventing a bigger crash in the market. They acted as a major bulwark against the rampant selling by foreign funds which pulled out Rs 3,700 crore in three days.
On Thursday,the BSE Sensex recovered from a 2-year low by gaining over 158 points at 15,858.49 amid easing food inflation,strengthening rupee and firm European markets as investors squared positions during the settlement of this months derivative contracts.
However,FIIs pulled out Rs 1,636 crore during the session. Domestic FIs accumulated stocks worth Rs 1,047 crore on Thursday,aiding a recovery in the market after the weeklong sell-off.
Domestic FIs prevented a bigger crash on Dalal Street. Had domestic FIs not picked up stocks,the Sensex would have fallen another 1,000 points this week, said BSE dealer Pawan Dharnidharka.
Meanwhile,the rupee,which had fallen to historic low against the US dollar recovered some ground. The Indian rupee closed 29 paise higher at 52.06/07 per US dollar today after its eight-day losing streak was arrested by fresh selling of the American currency by exporters and some corporates,coupled with dollar weakness overseas and a smart rise in domestic equities.
The market remained in the negative terrain till late afternoon trade as most of the Asian markets were subdued. However,strong openings in the European markets on signs that euro-zone debt crisis may ease lifted investor sentiment.
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