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Foreign funds turn sellers

Calcutta, Oct. 24: After pumping in millions of dollars while stock prices tumbled, foreign institutional investors (FIIs) turned sellers as the market recovered.

Foreign institutions turned sellers in shares today for the first time in a month with net sales of Rs 87.5 crore — $19.1 million. FIIs have infused Rs 5,756.6 crore — $1.25 billion — in shares in October alone, according to figures published by the Securities and Exchange Board of India (Sebi).

Over the four previous trading sessions, FIIs invested Rs 1,343 crore even as the sensex shed 282.12 points and all heavyweights went into a tailspin. They have scaled up their exposure in every trading session for the last one month. They were net sellers in shares for the last time on September 24, when they offloaded shares worth Rs 343 crore as against fresh investment of Rs 234 crore.

Today, FIIs sold shares worth Rs 477 crore as against fresh buying of Rs 390 crore. They have, however, gone short on stock and index futures to hedge their long positions in the cash market.

“The FII selling doesn’t look ominous — they offloaded a small amount. There’s no known redemption pressure abroad, and there’s enough liquidity from within India to balance selling in such small volumes,” said brokers.

Of late, while betting more on shares, foreign institutions have been offloading debt instruments. On Thursday, they pared their exposure in fixed-income securities by Rs 263 crore — a little over $57 million — for the second time in a week.

“The rally in the debt market and the hardening of the rupee attracted significant inflow of FII hot money. Now that the government is looking to check the rise of the rupee and debt yields are rising again, it’s natural that the FIIs are pulling some cash out of the market,” explained a debt market trader.

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