Well the short answer is not yet. The transaction patterns of FII’s seem to show that overall they continue to remain bullish. There has been no exodus, even though they are starting to get bearish. The next few weeks will shed more light, whether FII’s will provide support or go into an exodus mode.
As the Nifty dropped by nearly 340 points from beginning of this month, FII’s have been net sellers of equities during this period.
However during the past three days, even as Nifty dropped by more than 1% or nearly 70 points, FII’s have been net buyers on all the days. They bought Rs 355 Crs yesterday on May 14th along with Rs 159 Cr and Rs 317 Cr on 11th and 10th respectively.
Overall, for the whole of 2012, FII’s have been net buyers to the extent of Rs 38000 Cr, while being minor sellers in April (Rs 1600 Cr).
A few months back during Jan to March ’12 time period, when the markets were in freefall, FII’s started to provide support throughout the 4500 to 4800 range. It needs to be seen if they again step in to provide support or not.
On the other hand, how will we know if FII’s are going into a selling mode? Well, we don’t have to look too much in the past. FII’s started to exit the markets last year around Jan ‘11 – Feb’11 timeframe , right near the market tops, selling around Rs 8000 in each of those months with consistent selling on most of the days. We need to keep a close watch on FII numbers for the next few week – those tend to be better indicators than the FII interviews that are published in media.
In summary, the transaction patterns of FII’s seem to show that overall they continue to remain bullish. There has been no exodus, even though they are starting to get bearish. The next few weeks will shed more light, whether FII’s will provide support or go into an exodus mode.
