Can it make our market flat for the next few years?
It should be other way around like whats happening now. they sell at lower levels and cover back at higher levels.
Right now Nifty is 17,668 - it is only one month since the news came that FII were continuously selling.
Experts say, that FII were selling as they wanted to book profit as most of the emerging market portfolio were in losses. India was an exception and they started selling to cover the losses in other market - All this is from interviews which I have seen.
I think the reversal has started and FII have started to buy and hence the rally which we are seeing.
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If money leaves, it only makes space for it to come back or leave more of it. If its already in then, there is scope for it to leave or to add more. Make what you will of this.
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This is not physics, this is economics, there is no space limitation. The valuations may going up, up and up if the money is coming in, they will come down eventually but can stay elevated for extended periods of time, sometimes even creating a bubble.
Markets can remain irrational more than you can remain insolvent, as said by Keynes.