Foreign investors sell record shares worth Rs 16,877 cr in August

Foreign investors sold a record amount of 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 Rs 16,877 crore ($2.55 billion) in shares in August, more than the previous monthly record of Rs 15,347 crore in October 2008, according to data from National Securities Depository Limited (NSDL).

The sales helped push the Nifty 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 Rs 27,520 crore 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 economy grew 7 per cent 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.

Meanwhile, a delay in the recovery in earnings has led Macquarie, Barclays and Ambit to downgrade shares over the last few days.

($1 = Rs 66.2625)

(Keren Rebelo)