With the Indian equity market recovering post-Budget amidst resumption of buying by foreign institutional investors (FIIs), domestic institutional investors have turned sellers. (Historically, DIIs have mostly remained sellers when FIIs have bought into Indian equity.) Selling by DIIs in March so far has been the highest in over a year. According to BSE data, after last January’s net selling of Rs. 7,880 crore, DII selling stood highest this March so far at Rs. 4,470 crore. On the other hand, after being sellers in January and February, FIIs are back with net buying of Rs. 7,745.74 crore — the highest since October.
Despite the Nifty 50 posting a smart 7 per cent recovery post-Budget, it is still down 6 per cent year-to-date.
Year-end phenomenon
Prior to the Budget, Nifty-50’s year-to-date return showed double-digit negative returns.
The current offloading by the DIIs is largely the result of selling pressure triggered by mutual funds and weak inflows into equity MFs. An equity dealer said LIC, along with some of the top private insurance companies in the country, have been selling in the market. The reason is partly a year-end phenomenon as well as profit-booking.
According to data provided by the Association of Mutual Funds in India, the industry’s equity assets under management (AUM) dropped to Rs. 3.18 lakh crore in February from Rs. 3.45 lakh crore in January, the lowest since April 2015.
