Mumbai, May 10: Market analysts are apprehensive that foreign institutional investors’ (FIIs) appetite for Indian stocks may wane after putting in close to $7 billion on the bourses since April 2003.

Sebi figures reveal that net sales by FIIs in May is to the tune of Rs 224.90 crore, a trickle by their standards as their net purchases for the calendar year 2003 is Rs 18,500 crore.

“The money can fly off,” said a fund manager affiliated to a leading mutual fund. He was referring to the FIIs who are credited to have led the bull rally in the local markets. “In the long term, they may still find Indian stocks attractive, but in the short term, it would be an unattractive place to invest,” he added.

“And they (FIIs) have been selling recently. Though in small amounts, it is significant as it replaces their huge buying exercises of the past,” Navin Roy, a dealer at Taib Securities, said.

Share prices fell 2 per cent to a six-week closing as the sensex dropped 2.01 per cent to 5,555.84 points in low but highly volatile trading as the local bourses mirrored the sentiments prevailing in other Asian markets. Adding to the FIIs’ discomfiture is the possibility of a hung parliament.

The stock markets expect only a stable government to pursue market-friendly reforms, an attribute that FIIs are very particular before taking an investment exposure.

External factors that have come to the fore include the sudden slowdown in the Chinese economy. As a result, metal shares fell sharply across the globe. The fall was more acute in the Japanese markets.

Moreover, oil prices moving close to $40 a barrel is again putting many economies on the back foot. The fear that the US will revise its interest rate policy sooner than expected has made markets jittery as this may make American markets and its currency a better bet for investment.