FIIs pull out over Rs 10,000 crore in 2010 so far

Though the BSE Sensex pulled back from an early slide and closed with a 20-point gain at 15,935.61 on Monday thanks to a recovery...

Though the BSE Sensex pulled back from an early slide and closed with a 20-point gain at 15,935.61 on Monday thanks to a recovery in European shares foreign institutional investors FIIs continued their selling spree on the stock exchanges. They pulled out over Rs 935 crore on Monday,thus taking the total outflows through the FII route to over Rs 10,000 crore at Rs 10,616 crore so far in 2010.

FII outflows were putting pressure on the rupee as well. The rupee ended near its lowest in seven weeks on Monday,unable to sustain a boost from the stock market turning around early losses and as the dollar lost ground against major currencies. The partially convertible rupee closed at 46.83-84 per dollar from 46.73-74 on Friday. Both the rupee and the stock market were very volatile today. The rupees weakness was initially held by custodial flows,but with the stock market tanking,it followed the weakness,recovering mid-afternoon when globally risk got pushed up, said a dealer.

According to market analysts,the 1,000-point loss in the Sensex in the last two weeks was due to withdrawals by FIIs. Further,there are rising fears that the government may unwind its fiscal stimulus in the forthcoming budget. The Reserve Bank has already started exiting from accommodative monetary policy. The government is expected to follow suit in the near future,they said.

In a day of volatile trade,the Sensex ended flat after rebounding from the days deep lows it hit on lower-than-expected growth projection. Weighed down by lower Asian advices,the Sensex opened 95 points down and hit a low of 15,651.99 on all-round heavy selling triggered by the 7.2 per cent GDP advance estimate,but managed to close in the green with a meagre 20 point gain.

Strong European equities with higher commodity prices boosted energy and mining shares and also recovery in financial services,which slipped 6 per cent last week,assisted the market rally in the later part of the day to close in the green for the second day in a row after last weeks bloodbath. Indian bourses opened weak in line with the Asian markets. The markets then drifted downwards. The strong opening of European markets induced short covering which pulled the markets up, said Bonanza Portfolio assistant vice-president research equity Avinash Gupta.