Fii Outflows At $110m In August

There was an outflow of $110.9 million because of net sales by foreign institutional investors in the capital markets during the month of August.

This reverses the trend in July when the net FII purchases exceeded the net sales by $19.7 million. According to figures collated by the Securities and Exchange Board of India, of the $110.9 million outflow in August, $92.8 million was on account of equity sales while the remaining $18.1 million was due to sales of debt instruments.

This means that in the first eight months of calendar 1998, there has been a net outflow of $236.2 million due to foreign portfolio investment

The figures for the fiscal year perhaps better indicate the investment policy of FII, says a brokerage house official.

With the exception of July when the net position was an inflow of $19.7 million, there was been a outflow of funds in all the remaining months.

Till date, this means that there has been a total outflow of $ 552.1 million due to sales by FIIs. During 1998, the gross purchases by foreign institutional investors have been Rs 8862.5 crore. Compared with this, the FIIs have made gross sales of Rs 9909.6 crore. The net total investment has been negative with Rs 1047.1 crore having been taken out of stocks in the Indian market.

FIIs have been consistent sellers during this year, except briefly in the months of February and March when their net investments were positive.

In February, FII made net investments to the tune of $190.2 million and they made net investments worth $183.2 million in March. "The hype surrounding the elections and possibility of a stable government continuing the reforms process enthused FIIs to invest in India, at a time when the rest of the region looked shaky," said a foreign investor.

"However, hopes were belied by the Pokharan blasts and in-fighting within the government. Now with the rest of the world markets coming under pressure, it will be some time before allocation increase again," he added.