Foreign institutional investors (FIIs) have been net sellers to the tune of Rs 2,421 crore in August 2007 to date in the domestic equity bourses?their single largest selling spree in any month this calendar year. This comes after Indian equity markets witnessed record buying worth Rs 23,872.40 crore by FIIs in July, propelled by several mega initial public offers (IPOs) and strong first-quarter corporate results.
Market analysts feel that the recent subprime mortgage crisis in the US resulted in FIIs reducing their exposure in the Indian market, even more than what was witnessed during the unwinding of the yen carry trade in March 2007, when FIIs were net sellers to the tune of Rs 1,082 crore.
Amitabh Chakraborty, head of research at Religare Securities, said, ?There is a lot of uncertainty regarding the enormity of the crisis in the US subprime mortgage market. This has resulted in a pullout of funds by FIIs to an extent. Still, FIIs are very active in the domestic market and have aggressively hedged their position in the derivative segment.?
Now, investors across the globe are keenly watching what happens on August 15, 2007. This is the day when the 45-day notice period given by investors to their funds expires.
Investors are supposed to give 45 days? notice to their respective funds for any redemption in their investment in hedge funds. This notice period pertains to the third-quarter of CY08.
This, market experts believe, will provide some clarity on the impact of the subprime mortgage crisis.