A massive influx of FII money in recent months has taken the Sensex close to its 2008 high. In September this year alone, FIIs pumped in Rs 29,195 crore into the equity markets.
However, the prevailing bullishness could easily reverse given the condition of the US economy and fears of a double dip recession around the corner. The 2008 crash was the result of FIIs being forced to sell following the subprime crisis in the US.
If FIIs decide to withdraw now, the small investor, who is usually a late entrant, may be crushed. Again.
21.6 was the average PE of the BSE Sensex in August 2010. In December 2007, this was 26.94.
Rs 89,525cr was the net FII investment in stocks in the first 9 months of this year. FIIs had pumped in Rs 70,940 crore in 2007.
