FII selling visible in bulk deals

On a day when FIIs sold net equity worth Rs 2,702 crore, they also dominated the bulk deal sales numbers (on Thursday).

Out of the Rs 200-crore bulk deal sales logged on Thursday, FIIs sold Rs 139 crore. And these were stocks that are also present in the F&O segment but do not show significant volumes.

Experts said that the panic on Dalal Street was visible for all to see. “The quality of stocks sold by FIIs in bulk deals indicates their approach to cleaning up their portfolio,” said Mr Arun Kejriwal, Founder KRIS Research.

Alok Industries Ltd, Aurobindo Pharma, Firstsource Solutions, Great Offshore, Hexaware Technologies, IFCI, Jindal SouthWest Holdings, Mercator Lines, Nagarjuna Fertilisers, Orchid Chemicals and Praj Industries were the stocks sold by FIIs in bulk deals on Thursday.

It is interesting to note that Credit Suisse First Boston Singapore alone sold equity worth Rs 54 crore in bulk deals in six scrips. “We believe the slowdown would ‘feel' worse than reality, as the economic bellwether sectors (construction, cement, real estate) are ‘local' in developed states. They are an insignificant 3 per cent of the Nifty EPS but by influencing perception of how well the economy is doing, have a much more significant impact on the market. This is likely to be exacerbated by fund flows – we estimate only about 20 per cent of the ETF and 2 per cent of non-ETF FII flows seen in 2010 have reversed YTD. The market may languish till mid-CY11, falling to 16,000 level,” said Credit Suisse in its February 17 note.

Market experts said that the beneficiary of this FII selling from India would be US, Brazil South Africa, Russia and even Saudi Arabia.

“FIIs are concerned about subsidies on fuel, fertiliser and food and this has made them jittery,” said Mr Gopal Agarwal, Deputy CIO and Head Equity MIrae Asset Global Investments (India). “Increasing interest also starts bringing in other risks with it and the unrest in the Middle East is not helping things either,” he added.

Another school of thought says that interest rates and commodity prices have already been discounted and oil is the only variable left to be factored in.

“Though there is expectation of 15 per cent growth in corporate earnings by FY13, oil is the only joker in the pack that is very difficult to assess and could trigger a further fall in the near term,” said Mr K. Ramanathan, CIO – Single Manager Investments, ING Investment Management.