FIIs - Alive and Kicking
Who says the FIIs are losing ground? Probably the FIIs' behavior and the Sensex movement is being correlated. For the last three weeks, the Sensex has been at its lowest best after the boom at the start of FY2000. It's during the same period, when the FIIs have been net sellers. During the month of July, the net investments by FIIs was negative for almost 13 out of 21 days. The FIIs recorded net sales of Rs 1,418 crore.
During the month of August, the Sensex has moved up from 4253.69 to 4317.04 on August 9th. FIIs were net buyers during the same period, with their total net investments to the extent of Rs.190 crore.
But the confusion was because the statistics revealed something else, though on the face of it, it looked liked the Sensex moved with the FI' sentiments. If the net investments from the month of June till August is compared with the Sensex movement, the correlation is negative at -0.03. The correlation was positive till mid-July when it was 0.21. During the second half of July, the correlation turned negative at -0.21. This negative correlation increased to -0.45 in the first half of August. For the entire month of June, the correlation was positive at 0.16 and for July, it was negative at -0.12.
However, what has been happening from the mid of August is a clear indication that the FIIs are still the market drivers. There was strong buying interest by the FIIs, and of course the Domestic Institutional Investors too, which has pushed up the Sensex strongly. The FIIs pumped in net funds to the extent of Rs.573 crores last week. The rally is to continue for the whole of this week and the Sensex may cross the 5000 mark.
Tanuja R Nemivant