The journey for the BSE Sensex from 15K to 16K has not been a smooth one. It witnessed unstable inflows of foreign funds. Foreign institutional investors (FIIs) pumped in $2 billion and and at the same time pulled out around $1.9 billion. And with every outflow of FII funds , domestic mutual fund (MF) houses scented opportunity to buy and went shopping for equities.

The BSE Sensex scaled the 15K peak on July 9 and data from the Securities and Exchange Board of India (Sebi) shows that till the end of July, FIIs had pumped in $2.9 billion Rs 11,600 crore). Interestingly, during this period, MFs sat on the sidelines and sold equities to the tune of Rs 1,167 crore.

The picture was completely different in August, when FIIs sold their equities to the tune of $1.92 billion(Rs 7,600 crore). In fact, FIIs sold to the tune of $1.76 billion (Rs 6,800 crore) in the second week of August. Here, MFs bought equities to the tune of Rs 4,093.90 crore .

The tables turned again in September. Till date, FIIs have pumped in $1.21billion (Rs 4,800 crore) and MF have sold equities worth Rs 287.90 crore.

With the Fed cutting rates, it is likely to have some impact on the Indian economy says market experts. Kaushal Sampat, COO, Dun & Bradstreet, said, ?The widened interest rate difference between India and the US could result in a further surge of capital inflows especially from the FIIs. This may lead to an appreciation of the rupee. This might put pressure on the Reserve Bank of India (RBI) to intervene in the Forex market to preclude appreciation of the rupee beyond its comfort zone.?

Ritesh Jain, debt fund manager, Principal Mutual Fund, said, ?The foreign flows in emerging markets may look up, putting pressure on the domestic currencies to appreciate. The RBI may have to intervene aggressively to stem the up trend in local currencies adding to domestic liquidity.?

Overall, trade experts believe that the strong fundamentals and an appreciating rupee would attract inflows. It will be in the month of October, when the first half results pour in that a new ?look-in? would happen.