Mumbai: While foreign institutional investors (FIIs) were net sellers to the tune of nearly $800 million in Indian shares so far in February, domestic institutional investors (DIIs) stocked up a net of nearly Rs7,000 crore of the asset class in the same period, limiting losses for the domestic stock market.
Since the start of February, benchmark equity indices BSE’s 30-share Sensex and National Stock Exchange’s 50-share Nifty shed 4.63% and 4.42%, respectively, mirroring the selloff in world equities, as investors continued to fret over strong bond yields as US treasuries rose close to four-year highs.
MSCI World Index and MSCI EM index shed 7.33% and 8.91%, respectively, in the same period.
FIIs have been net sellers of Indian shares to the tune of $771.47 million, or Rs4,966.52 crore, since the start of the year to 9 February, data from capital market regulator Securities and Exchange Board of India (Sebi) showed.
On the other hand, DIIs have pumped in a net of Rs6,762 crore in Indian shares since the start of the year to date, data from National Stock Exchange showed.
FIIs mainly sold as risk was off the table, and they cut down on riskier bets, while DIIs, particularly mutual funds (MFs) that have been receiving steady inflows in their equity schemes, adopted bottom up approach to pick value buys in the market correction.
“For FIIs, it is the global turmoil that is directly impacting their investment decisions. They are cutting down on risk," said Deven Choksey, group managing director, KR Choksey Investment Managers Pvt. Ltd
“ DIIs particularly mutual funds have been buying steadily in the correction, on the back of continued inflows from retail investors into their schemes," added Choksey.
Of this, mutual funds were net investors in Indian shares to the tune of Rs3,643.19 crore so far this year.
“This is what you should expect now. Every time the market falls, DIIs will come in, and every time it spikes, and FIIs are buying, DIIs will lock in gains," said Anand Shah, deputy CEO and head of investments at BNP Paribas Asset Management India Pvt. Ltd.
For FIIs, they have wider opportunities, and if global liquidity crunch sets it, they have to sell risk—and will offload equities globally, specifically emerging markets. For DIIs, they would look at opportunities in Indian market to stock up their inflows," added Shah.
Insurance companies may have been investing some corpus, dealers said, but not all of them had funds on hand to deploy in equity markets.
“Private insurance companies, specifically those that are not promoted by banks, have not been sitting on much of cash, as the inflows have not been strong in recent times," said Sampath Reddy, chief investment officer, Bajaj Allianz Life Insurance Co. Ltd.
“So, they haven’t bought as much equities in the market even before the correction and also in the correction," added Reddy.