The recent downslide in stock market has once again exposed India's over-dependence on portfolio flows, global equity research major Morgan Stanley said in its latest report. The flows have accounted for nearly one-third of the total capital flows into India over the past three years, it added.
However, the portfolio funds have offloaded more than $2.5 billion since the recent downward momentum began on the bourses in the first half of May.
Huge sell-off by foreign financial institutions has been named as the major trigger for the ongoing downslide on the bourses; just like robust FII inflows were considered to be the major driver of the record-breaking northward rally until the bearish sentiments seeped in the market early last month.
The Bombay Stock Exchange's 30-share Sensex dropped more than 13 per cent in May on the back of surging FII outflows, sluggish global markets and huge profit booking at higher levels.
The downslide has continued in the month of June as well and the barometer index has already plunged below the psychological support level of 10,000, while it has lost more than 22 per cent from its all-time high above 12,000 level scaled last month.
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