According to market circles, FIIs pulled out Rs 100 crore each on October 20 and 21, thereby adding to the bearish trend on the markets. As a result, FIIs have taken out over Rs 500 crore from India in October so far. In fact, FIIs had sold stocks throughout the month with the maximum sale being on October 11 when FIIs pulled out Rs 173 crore.

``FIIs are reshuffling portfolios. They are booking profits in high-priced software shares. This is not a reflection of the state of affairs on the economic front. FIIs normally sell shares in November and December of a calendar year to keep the account books in order,'' said an FII analyst.

Foreign funds wereseen switching from software and pharmaceutical shares to cyclicals such as cement, steel and petrochemicals, dealers said. This is a major reason for the 160-point fall in Sensex in the last two days. Recent sales by foreign funds hit the market sentiment and prompted local speculators to cut back long positions. Marketmen had already discounted reports that the Union Cabinet had cleared the much-delayed Insurance Regulatory Authority (IRA) bill, telecom package, derivatives trading and the new foreign exchange act. ``These were expected decisions. There should be speedy follow-up actions. IRA chief N Rangachary has said it would take at least nine months for private companies to come in after the passage of the bill,'' said BSE broker BV Shah.

Another reason for the FII withdrawal is Y2K problem. Wary investors are moving money out of Asian countries seen as ill-prepared for the Y2K millennium bug, an expert at Warburg Dillon Read said on Friday. Economies perceived to be better prepared, such as HongKong and Singapore, stand most to gain, Sean Debow, head of regional valuation and accounting research told Reuters in an interview.

"Clearly, funds are moving out of Indonesia, India, Thailand and China on account of Y2K," the millennium bug expert said. "Money that is Asia-specific, and that is a large portion of funds that is invested in Asia - we believe that money has already started to move to Singapore and Hong Kong."