Indian Stock Markets dances to the tune of FIIs

Foreign institutional investors (FIIs) were again net sellers of Rs 407.68 crore (provisional) today, according to data released by BSE. FIIs were net sellers of Rs 210.20 crore on Tuesday, August 16, according to data released by Sebi today. There are a total of 1,740 foreign funds registered with Sebi.

So far this month the FIIs have sold close to $1.5 Billion (INR 6800 crores) and the benchmark index SENSEX is down over 7%. The fall has been severe in select madcaps where due to low liquidity the stocks could not sustain the selling pressures and are down in the range 20 to 50%. FSL, one of the largest pure play BPO company of India is down close to 35% in August. Similarly a Mumbai based midcap real estate company HDIL is down close to 30%. Similarly there are many midcap stocks where the fall has been far more than the index fall due to significant FII selling.

But at the end everything has a price the stocks cannot just keep falling and come to zero. The stocks which has been brutally battered without fundamental reason and has just been the victim of FII selling can be looked at for an investment horizon of 1 year, as the fund flow to Indian equity will again resume once panic settles.