In 2011, despite all the activity by FIIs in gross terms, in net terms they neither put anything into equities nor took anything out.
Apart from debt, portfolio reallocation seems, for them, to have been the only game in town.
It will be months before SEBI data on FII trades in individual companies become available. Till then one way to take a peek is to look at FII shares in floating cap.
According to Securities and Exchange Board of India, FIIs' investment witnessed a net outflow of over Rs 2,700 crore.
Share in floating cap
Between December 2010 and December 2011, FIIs increased their share in floating cap by 1 per cent or more in 10 Sensex companies and cut by 1 per cent or more in 14.
At one end of the scale (for SBI, ICICI Bank, Hindalco, Jindal Steel & Power, BHEL and Tata Steel) falls in FII share were quite large: as much as 14 per cent of floating cap for SBI, and 5-6 per cent for the rest. At the other end, even the largest increases (HUL, Mahindra & Mahindra, TCS, NTPC, ONGC and ITC) were small (between 2 and 3 percentage points).
With the exception of Cipla and Bajaj Auto, companies from which FIIs pulled out suffered large price falls, of 35-50 per cent.
A number of companies in which FIIs upped their stake also fell, but less than the 25 per cent fall in the Sensex.
Correlation analysis
For Sensex companies as a group, the correlation between change in FII share in floating cap and changed valuations during 2011 was 0.63 (zero means no correlation at all, a score of 1 indicates perfect correlation).
This was far above the correlation of 0.4 for the January 2008-March 2009 meltdown (net FII outflows, Rs 60,000 crore), but in line with the April 2009-December 2010 period when huge FII inflows (Rs 220,000 crore) briefly drove the Sensex back to pre-crisis levels. For this period, the correlation between changed FII share in floating cap and changed market valuations was 0.66.