A fall of over 1,700 points in Sensex over the last week is a pointer to the fact that FII money flow into the capital markets may come down in the last three months of this fiscal.

In fact, Prime Minister’s Economic Advisory Council has projected that foreign institutional investments in capital markets will slow down to $5.5 billion in the last quarter of this fiscal.

Capital markets have received $6.3 billion in the third quarter of the current fiscal from FIIs, the council said quoting market regulator Sebi figures. “We project a somewhat smaller figure for Q4, bearing in mind the experience of net selling in March during previous years,” it added.

The EAC expected capital inflow from proceeds of GDR/ADR issues to be about $3 billion. Adding this $3 billion to foreign investment in capital markets, total portfolio investment is pegged at $14.8 billion during the second half of 2007-08, against $18.3 billion in the first half. FIIs were net seller to the tune of $348.50 million in the equity market in the first month of this year till last week.