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Sensex is at 16,000 with stocks having lowest FII weightage

By Rajesh Mascarenhas, ET Bureau | 11 Nov, 2013, 06.38AM IST

Moral of the story: The FII heavy stocks are the only drivers of the market while the rest of it is below the levels recorded in 2008 and 2010.

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MUMBAI: Screaming headlines and breathless market commentary about the Sensex's alltime highs have dominated discourse on the markets in recent weeks. While most experts have focused on surging overseas investor flows as the main driver — although corporate performance and a rebound in some sectors have also played a part — the absolute control that FIIs have come to exert on the market is perhaps not so well-understood.

Since January 2012, FIIs have invested nearly Rs 2,20,000 crore in Indian stocks. The rush has happened despite poor corporate earnings and economic growth slipping to a decade-low in FY13.

ETconducted an exercise to find a different way of expressing the extent of FII dominance. We tweaked the Sensex to remove all stocks with low FII holding and assumed the benchmark to comprise the top 15 stocks with the highest foreign fund holding. Seen this way, and taking the Sensex's base of 2008, its value is actually 41,000, double the current levels

                                                                  Nagesh dubey

                                                                  Pgdm 1st year