The worsening financial crisis in the US has led to a selling frenzy among the foreign funds invested in Indian stocks, with three of the major ones -- Morgan Stanley, Goldman Sachs and Merrill Lynch offloading as much as Rs 170 crore (Rs 1.7 billion) in the open market transactions.
Analysts believe the liquidity crunch being witnessed by major global financial institutions has made them heavy sellers in stocks from emerging markets including India as they need cash back home.
As a result, Indian stock market has witnessed the net sale by FIIs touching nearly two-billion dollar mark so far this month.
According to data available with market regulator Securities and Exchange Board of India, the foreign institutional investors have sold off shares worth $1,998.50 million (Rs 8,061 crore) so far, this month.
While in the past week alone FIIs have offloaded shares worth $549 million (about Rs 2,277 crore).
"Majorly the foreign investors based in US are the main sellers in Indian equities as they need cash back home to shore up their balance sheets," Bonanza Portfolio President Research P K Agarwal said.
Morgan Stanley alone sold off shares worth Rs 104 crore (Rs 1.04 billion), while Merrill Lynch and Goldman Sachs offloaded equities worth Rs 36 and 30 crore (Rs 360 to Rs 300 million) respectively, in a host of domestic companies in various bulk deals on the bourses in the past week.
However, Lehman Brothers and Citigroup Global Markets managed to purchase shares worth over Rs 22 crore (Rs 220 million) during the past week, bulk deal data available on the stock exchanges show.
Meanwhile, FIIs seem to be favouring the debt market over the equities as they have made a net investment of more than $798 million in debt securities so far this month.
Analysts believe the global markets could get a fresh lease of life, if the US Congress votes in favour of the $ 700-billion bailout package for the troubled financial institutions.
Besides, Deutsche Securities offloaded securities worth Rs 9 crore (Rs 90 million), CLSA Mauritius bought shares worth over Rs 22 crore (Rs 220 million), as per data available on the Bombay and National Stock Exchanges.
The BSE's benchmark Sensex plunged nearly 1,000 points last week and ended at 13,102 on Friday.