It was the second round of the FIIs' exit act on the Indian bourses in the current financial year. While the first round was triggered by the nuclear test and its aftermath, it's the US-64 worry that has forced many FIIs to press for sales. FIIs have offloaded equities worth Rs 627.7 crore on the Indian bourses during the first five trading days of the current month.

On the back of a Rs 294.7 crore gross purchase, during the week-ended October 9, the net FII outflow was Rs 333 crore. In dollar terms this translates into a net sales of equities worth $ 78.3 million. Since January 1 this year, cummulative FII invstment is down by $ 287.3 million from $ 8998.2 to $ 8710.9million.

Interestingly, as per the statistics released by the Securities and Exchange Board of India (Sebi) on Tuesday, after selling debt instruments heavily since the beginning of the year, the FIIs remained totally inactive in this segment during the week to October 9.

Of the total Rs 333 crore outflow, the major FII selling during the week under consideration took place on October 5, the day the BSE Sensex dipped by a record 224 points on US-64 jitters. The day had witnessed an FII outflow of Rs 88 crore on the Bombay Stock Exchange and another Rs 55 on the National Stock Exchange. The news of the US-64 reserves turning negative for the first time in its 34 years of existence and the funds likely decision of pruning its exposure in the equities segment by 4 per cent of its total corpus (equivalent to Rs 700 crore) had provided enough material for the markets' sentiment to turn overtly pessimistic on the first day of the last week.

Earlier, after the Pokharan II nuclear tests in May last, FIIs hadsold heavily during the month and also through the next month to exit from the Indian bourses. This time round, it is the US-64 scare, combined with the scepticism about rising non-performing assets levels of the banks and financial institutions, which has prompted them to re-enact the exit act for the second time within a short span of five months.

During the post-Pokharan months of May and June this year, the FIIs had sold heavily, both in the equities and the debt segments, forcing a combined outflow of $ 416.4 million (Rs 1720.1 crore). While the net FII outflow in the equities segment during those two months was $ 314.8 million (Rs 1308 crore), in the debt segment their net investments were a negative $ 101.6 million (Rs 412.1 crore).

While net FII investment during July this year had again turned positive at $ 19.7 million (Rs 83.7 crore), the trend had turned negative again in August. During August, the Japanese banking worries and the deepening of the South-East Asian crisis had forced the FIIs totake $ 106.9 million (Rs 457.1 crore) out from the Indian bourses.

Only last month again, with the FIIs bringing in $ 32 million (Rs 137.5 crore) the trend had turned positive.