Net FII outflow crosses $900 million in January

In what has now become an annual trend in January, foreign institutional investors (FIIs) went in for massive dumping of shares on the Indian capital markets, resulting in key indices plunging to five-month lows.

FIIs turned net sellers in January, the first time since May 2010, off-loading $912 million worth of shares (net of purchases).

The Sensex, the benchmark index on the Bombay Stock Exchange (BSE) has shed 10.3 per cent in January, the biggest monthly loss in 28 months. The Sensex has lost 12.5 per cent since its recent peak of 21,005 reached on 5 November.

Last week alone the Sensex lost 611.56 points (3.22 per cent), closing at 18,395.97. The S&P CNX Nifty, the benchmark index on the National Stock Exchange (NSE), lost 184.35 points (3.24 per cent) to close at 5,512.15 on Friday.

According to analysts, FIIs have exiting from the capital markets in a big way every January for the past four years.

A study by Religare Capital Markets indicates that Indian capital markets reported negative performance in the first quarter of six of the past 10 years. January has also been a weak month for the Indian stock markets over the past four years.