The sell figures of foreign funds has pushed Indian markets to almost three months lows and the Nifty below its 200 day moving average.
April 28 - Rs 1600 Crores
April 27 - Rs 770 Crores
April 24 - Rs 84 Crores
April 23- Rs 853 Crores
April 22 - Rs 16253 Crores (buy)
April 21 - Rs 1422 Crores
April 20 - Rs 660 Crores
If we see the figure of April 22, it should read a buy and not a sell figure. FIIs on this day bought a large sum in the cash markets from the sale of Daiichi stake in Sun Pharma. If we go further into April, we cannot see too much of net buy figures from FIIs in the cash market.
MAT the real issue with FIIs
As we write there are reports that a few foreign portfolio investors have come together to file a case in the court on the Minimum Alternate Tax (MAT) issue. In the Union Budget 2015, Finance Minister Arun Jaitley had decided to do away with MAT. But, that was only applicable for gains made from April 1, 2015 and only going forward. But FIIs would have to pay for gains made on the sale of shares in the previous years. Now, the government has slapped notices to foreign portfolio investors to pay money for the previous years.
This again has been contentious and there have been earlier rulings. In any case, what is worrying these foreign funds is the fact that the government on the one hand says it is not pursuing an aggressive taxation policy and on the other hand there seems to be a lack of transparency. This has somehow created suspicions in the mind of foreign portfolio investors who have sold aggressively in the markets.
When will they stop selling is hard to tell. The selling also maybe on account of the shift in allocation from India to the Chinese markets which are performing better. It may also be due to factors like a poor
monsoon, poor corporate results and so on.