Foreign investors offload $2.55 bn worth of Indian shares in August

Foreign portfolio investors (FPIs) in India offloaded shares worth a record Rs16,877 crore ($2.55 bn) in August, to make a killing amidst a global financial market crisis that saw investors withdrawing record funds from emerging markets, including China.

At Rs16,877 crore, FPI sale of Indian stocks was more than the previous monthly record of Rs15,347 crore in October 2008, according to data available with the National Stock Depositories Limited (NSDL).

FPIs' August sale of Indian shares were worth even more than the record offloading of stocks during the global financial market crisis of 2008, as funds sought to cash in on a weak China data.

The stock sales helped push the National Stock Exchange (NSE) Nifty down 6.6 per cent in August, its worst monthly loss since November 2011.

Analysts said the sales were largely a result of the overweight positions in India by foreign investors, who have been heavy buyers since 2012.

Foreign investors had been net buyers as early as July when India was seen as benefitting from outflows from China. They remain net buyers of investing around Rs27,520 crore this year.

Market analysts say the asset sale by FPIs in India doesn't necessarily mean they are negative on India. It has more to do with profiting than taking positions in the market, they say.

Data on Tuesday showed India's economy grew 7 per cent in the April-June quarter from a year earlier, much slower than expected, but a rate that matched expansion in China.

Foreign investors are now looking at how soon the government will come out of the political wrangling and implement stalled reforms that are crucial for investor confidence.