Foreign Investors Sell Net 2.81 Billion Rupees of Indian Stocks

Overseas investors sold a net 2.81 billion rupees ($53.4 million) of Indian stocks yesterday, reducing their investment in the equities this year to 433.7 billion rupees, according to the nation’s market regulator.

Foreigners bought 21.8 billion rupees of shares and sold 24.6 billion rupees, the Securities & Exchange Board of India said on its website today. Foreign funds sold a net 5.84 billion rupees of bonds, paring their inflow into debt this year to 183.3 billion rupees, the data show. They put 421 billion rupees in bonds in 2011.

They’ve sold a net 5.82 billion rupees of stocks this month after being net buyers for the first three months of 2012.

Finance Minister Pranab Mukherjee last month proposed to introduce the General Anti-Avoidance Rules to check tax evasion by companies through the misuse of treaties with nations. Offshore funds are concerned the new rules, which must be passed by lawmakers, will apply to their holdings of local shares.

Foreigners have invested 4.878 trillion rupees in stocks and 1.391 trillion rupees in bonds since they were allowed into the country in 1993.

India’s $1.2 trillion stock market, Asia’s fifth-biggest, is influenced by flows from overseas. Inflows from abroad surged to a record in 2010, making the BSE India Sensitive Index (SENSEX) the best performer among the world’s top 10 markets. The largest- ever outflow in 2008 led to the biggest annual slump of 52 percent.

Offshore funds pulled out 27.1 billion rupees from local equities last year, compared with record flows of 1.33 trillion rupees in 2010, as Europe’s debt crisis threatened the global economy and cooled demand for emerging-market assets. That led to a 25 percent drop in the Sensex, the second worst annual loss, and sent the rupee to an all-time low.

The regulator provides data on shares bought and sold by large investors, including trades in the primary and secondary markets, with a delay of at least a day.

To contact the reporter on this story: Paresh Jatakia in Mumbai at pareshj@bloomberg.net

To contact the editor responsible for this story: Arijit Ghosh at aghosh@bloomberg.net

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