Domestic institutional investors (DIIs) continued their selling spree in the local market with a record net outflow of around Rs 30,000 crore in equities in calendar year 2012.
DIIs, including banks, domestic financial institutions, insurance and mutual funds, had collectively net-sold Rs 29,287 crore worth of equities till September 7, the highest ever sell figure, as compared to net purchases of Rs 21,632 crore made in the same period of the previous year, stock exchanges’ data show. Local institutional investors had made a net inflow of Rs 27,815 crore in entire previous calendar year 2011.
After reporting net inflow of Rs 2,651 crore in the April-June quarter, DIIs offloaded shares worth Rs 9,852 crore in the past two months.
They were net sellers of Rs 22,086 crore in the first three months of the current calendar year. This is in contrast to the $12.32 billion or Rs 63,168 crore worth net purchases made by foreign institutional investors (FIIs) since January, according to capital markets regulator Securities and Exchange Board of India (Sebi).
Mutual fund investors, which accounted for one-third or Rs 10,246 crore of the total DII net outflows, have been redeeming their units, fearing their capital might get eroded in a falling stock market, while banks reduce their equity exposure.
Mutual funds, mostly, have preferred to invest in debt rather than equities, as interest rates are still ruling high and investors currently prefer debt to equity, say market analysts.
“DIIs consist of multiple segments and mutual fund assets under management (AUM) are going down as investors feel fixed deposits give safer and better return now, and a majority of Indian investors have the habit of investing when the market is in a clear uptrend,” said A K Prabhakar, senior vice-president, equity research, Anand Rathi Financial Services.
In 2012, as many as 1.89 million retail equity folios have been closed, Sebi data shows. The total number of equity folios was 36.59 million as on July 31, down five per cent from December last year, at 38.49 million.
DIIs have sold equity shares of large- and mid-sized companies, such as Cipla, Hindustan Unilever, Wockhardt, Cairn India, UltraTech Cement and Titan Industries in 2012.
