The Sensex closed below the 15,000 level as global and domestic institutional players mounted an onslaught on the back of global sub prime mortgage woes.
Withdrawal of funds by institutional players led to a dip of 615 points or 3.96%, dragging the benchmark index below 15,000. The Sensex settled at 14,935 points at close.
Market experts said that the prevailing weak sentiments in the global market, especially in the US economy, have influenced foreign institutional investors (FIIs) to sell stakes in the domestic market.
According to the data released by Sebi, FIIs have invested Rs 5,855 crore in the equity market in July. In fact, the foreign fund flow had started slowing down since last week-end.
FIIs were the net sellers at Rs 1,475 crore on July 27 and Rs 1,117.35 crore on July 30. Their investment in the market was marginal at Rs 35 crore on July 31.
Commenting on the FII slowdown of the investments in the equity market in the last couple of days, Vasudev Joshi, a fundamental analyst said that the weak sentiments prevailing in the global market, specially in the US economy, has affected foreign fund inflows into the domestic market. The future direction of the foreign fund flows to the Indian market depends on the health of the US economy, he said.
It seems that MFs have foreseen the market volatility in advance with fund houses selling more than Rs 900 crore worth of equities in July in the domestic market. However, they were the net buyers at Rs 700 crore in June.
A fund manager from a domestic fund house said that the fund houses have become cautious after burning their fingers following the last year?s May meltdown. They preferred to book profits at higher levels as majority of the front-running stocks were overvalued. Moreover, some fund houses have re-strategised their portfolio.