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Jayanta Mallick

Kolkata, Aug. 16 Are hedge funds, or FIIs having hedge funds, selling Indian equities to be able to withstand the redemption pressure in the US?

Though there is no clear answer from overseas funds and the market regulators, it is clear that from August 1 till date, FIIs have been net sellers.

According to a SEBI spokesperson, the market regulator does not pick out and categorise hedge funds from among the registered overseas entities. In response to a Business Line query, the SEBI official said that as of August 14, ther e were 1,071 registered FIIs and the total sub-accounts of the FIIs were placed at 3,281.

He said the market regulator does not necessarily follow the practice of putting the investment numbers of individual players in the public domain. However, market players said some of the FIIs have been mopping up liquidity this month.

According to the NSE provisional figures, FIIs were net sellers worth Rs 3,108.45 crore on Thursday. However, domestic institutions pumped in fresh money to the tune of Rs 1,399 crore.

Investment officials of prominent overseas fund houses confirmed that hedge funds have been selling on Dalal Street. “It’s more through sub-accounts and PN routes,” a CIO of an FII said.

However, he also said that the quantum of sale was not alarming. Some FIIs, who have suffered losses owing to their exposure in the US sub-prime market through hedge fund outfits and facing SEC probes for their trades in sub-prime housing assets or collaterals, have in fact been buyers in some Indian equities in the recent weeks, market sources said.

“The net effect of the global turmoil in the Indian market is restricted to liquidity and sentiment so far. More on account of lack of aggressive buying than large-scale sell offs,” said an overseas fund manager.

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