Sebi asks FIIs to explain heavy sales

NetScribes/Janaki Krishnan

The Securities and Exchange Board of India (Sebi) has sought clarification from custodians of foreign institutional investors (FIIs) regarding their sale figures for September 6, 2000.

According to the figures for that day, FIIs were net sellers to the tune of Rs 5.09 billion - the highest so far in a single day during the current year. Gross purchases on that day stood at Rs 2.15 billion, while gross sales were at a huge Rs 7.24 billion.

Sebi has asked for figures pertaining to the actual sales and purchases made by certain foreign investors on September 6. Sebi officials, however, refused to divulge any further detail on the matter.

According to sources, Sebi's initiative has been prompted by reports that many FIIs are resorting to `warehousing' stocks before making their figures public.

While the figures show that the foreign investors were net sellers on that day, they do not reflect the substantial buying that happened in the Reliance and Himachal Futuristic stocks on the same day.

"If these figures had been included, the net sales figure would have been lower," say sources, adding, the sales figures could also reflect the figures of big operators who operate from accounts in Mauritius.

Sources say that the misleading figures of FII sales and purchases of equities create panic in the market. Other categories of investors, taking their cue from the foreign investors, often dump their holdings without stopping to think about the reasons or even the consequences thereof.

Another theory surrounding the transactions by FIIs is that they have been indulging in "warehousing" (accumulating stocks with the purpose of creating an artificial shortage in the market) of certain highly fancied scrips such as Reliance, Himachal (HFCL), Sterlite and Global Telesystems. Incidentally, many of these scrips are speculative stocks and are often moved at the whims and fancies of large operators who operate in these counters.

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