Markets tumble on FII selling
Mumbai, Feb. 2: Heavy selling by foreign institutional investors, both in the derivatives and cash side saw the Sensex fall 193 points after opening up 200 points on strong global cues on Tuesday.
FIIs went short heavily on the Nifty which had a nine per cent open interest position on Tuesday.
Simultaneously the Nifty futures closed at an 8 per cent discount to the Nifty Spot which is unusual said Mr Pradip Hotchandani of Anagram Securities Ltd. This indicates heavy shorting he said. The FIIs have been selling heavily since January 1—Rs 8,500 crore and the unabated selling continued into February with a few days when they were buyers.
The Sensex closed down 192.59 points at 16,163.44, while the Nifty closed at 4,830.10 down 69.60 points.
Analysts feel that the FIIs are now taking their money back to the US after the proposal from the US President that banks should not makeproprietary investments.
Hence FIIs will have to wind down their positions in the emerging markets, said Mr Ambareesh Baliga of Karvy Stock Broking.
The US Fed is likely to increase rates and there are signs of revival in the developed markets.
Mr Baliga adds that FIIs have taken out Rs 500 crore in January, which has left a huge void, which will be difficult to fill. It also indicates that the local money is not enough to support the market.
AGE Correspondent
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