Domestic institutional investors (DIIs) are on the longest selling streak since December to book profits as markets have gained more than 2% during this period. DIIs have sold $501 million over the last 11 trading sessions with the BSE 30-share Sensex gaining 2.4% and the NSE’s Nifty gaining 2.9%.
Meanwhile, foreign institutional investors (FIIs) have been net buyers in each of the last 11 trading sessions at $618 million, taking their YTD tally to $289 million.
According to analysts, DIIs have been booking profits on the back of the recent market rally. “Overall, the markets have remained at the same level. So, market participants are trying to book profits at every opportunity,” said Nirakar Pradhan, CIO, Future Generali Life Insurance.
In the year-to-date, markets have remained flat with the 30-share Sensex marginally lower at 0.87%. On Wednesday, the Sensex closed at near its five-week high at 20,986.99.
“Domestic players are also cautious as the Urjit Patel report has cast uncertainty over the monetary policy. The report reckons that the Reserve Bank of India (RBI) should bring down the consumer price index-linked (CPI) inflation to 6% by the end of FY16. The central bank could further tighten rates to curb inflation, dashing hopes that the strengthening of rupee could lead to loosening of monetary policy,” Nirakar added.
On January 28, RBI governor Raghuram Rajan raised repo rate by 25 bps to 8%.
It is also believed that domestic players are keeping away from markets as the current financial year is at its end. “The participation is low as traders don’t want to take fresh positions with the current financial year near its end,” said Sahil Kapoor, chief technical analyst, Edelweiss Securities.
In the current calendar year, DIIs have sold $190 million worth of equities.
Market observers feel domestic players could revive their interest in markets post elections.
“Lack of a firm trend in macro-fundamentals is keeping sentiment and markets range-bound, possibly explaining the lower conviction levels and the lower volumes in the market. This is likely to continue till the elections,” said Lalit Nambiar, fund manager, UTI AMC.