Worse, the latest figures released by the Securities and Exchange Board of India show that there is no let-up in FII outflow. For the week ended July 3, the net FII investment was a negative Rs 75.7 crore or $18.7 million compared to Rs 54 crore ($13.3 million) for the previous week.

The pull out by the FIIs over the last two months is much more than the seasonal withdrawal of funds witnessed during November to December every year. For instance, during December 1997 the total amount withdrawn was Rs 578 crore. In May, FIIs pulled out Rs 883 crore and another Rs 836 crore in June. As a result the net cumulative investment by FIIs in the country stands reduced to $8.82 billion compared to $9.28 billion at the end of March, 1998.

While FIIs withdrew Rs 108 crore during April, mainly onaccount of profit-booking, the cumulative impact of the nuclear tests, the sanctions and a disappointing budget for the market saw a substantial outflow of funds during the subsequent months.