MUMBAI: A man sits on a pavement as he watches stock prices on a digital board on the facade of the Bombay Stock Exchange (BSE) building on Tuesday. The Sensex ended 587 points down at 25,696 on Tuesday.—AFP

MUMBAI: Foreign investors sold a record amount of Indian shares in August, offloading even more than in the midst of the global financial crisis, as turbulent markets in China led many funds to reduce their holdings in riskier emerging markets.

Foreign institutional investors sold a net 168.77 billion rupees ($2.55bn) in Indian shares in August, more than the previous monthly record of 153.47bn rupees in October 2008, according to data from National Securities Depository Limited (NSDL).

The sales helped push India’s broader NSE index down 6.6 per cent in August, its worst monthly performance 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 275.2bn rupees this year.

“If people are selling India it doesn’t necessarily mean they are negative on India. It could be the broader asset class is what they are negative on, in this case equities and emerging markets,” Gautam Sinha Roy, vice president and fund manager at Motilal Oswal said.

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

However, political wrangling has stalled crucial reforms, and investors are concerned that Prime Minister Narendra Modi’s reform agenda will fall short.

Published in Dawn, September 2nd, 2015

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