FIIs on sidelines as domestic MFs invest Rs 3013 cr

SENSEX@12000

Domestic mutual funds (MFs) are driving the market. They have made a net investment of Rs 3,013 crore in last 16 trading days "� between March 26 when the Sensex closed over 11,000 and today.

Foreign institutional investors (FIIs), the traditional driver of the Sensex, have tunred mere onlookers this time by making a meagre net investment of Rs 216 crore during this period.

Jaiprakash Sinha, head of research in Kotak Securities, said: "My belief is that the withdrawal of money from the secondary market is because the FIIs are re-allocating funds to the RPL IPO. Most of the FIIs are long-term investors and I do not see a lot of opportunistic money going out. Besides this, chances of a major correction due to the FII pullout is less because the mutual funds are reported to be sitting on a cash-pile of around Rs 10,000 crores which they need to invest. Some of this money is quite old and they have mandatory periods under which they must become fully invested. So with every correction following an FII sell-out, Indian funds are likely to start buying as they cannot perennially wait for a correction to start buying."

In the last 1000-point rally of the Sensex from 10000 to 11000, the FIIs had made net investments of Rs 9,751 crore while domestic mutual funds pumped in Rs 3,014 crore in the market.

The FIIs made Rs 18,565 crore net inflows during Sensex rally from 7000 to 8000 mark, followed by additional Rs 2,956 crore in 8000 to 9000-point rally and another Rs 15,632 crore during the 9,000 to 10,000 point journey.

The domestic mutual funds, on the other hand, made net outflow of Rs 2,935crore during the Sensex rally from 9000 to 10000 and Rs 1,974 crore when the index rose form 6000 to 7000 points.

In the 7000-8000 rally, they purchased a net amount of Rs 2,187 crore and pumped in another Rs 6,162 crore during the Sensex move from 8000 to 9000 points.

Out of 16 trading days of current 1000 points rally, except for April 10 when the domestic fund sold Rs 201 crore worth of shares, they are net buyers in 15 trading days. They made net investments of over Rs 100 crore each in nine trading days.

On March 27 and April 13, the mutual funds made net investments of over Rs 500 crore. On March 31, the net inflow of MF was Rs 441 crore and on March 28 another Rs 318 crore. On five trading days, the domestic funds have reported net inflow in the range of Rs 100 crore to Rs 320 crore.

The FIIs, on the other hand, on six out of 16 trading days sessions turned net sellers of over Rs 200 crore each. Of the last seven trading sessions, only on April 17 (Rs 253 crore) they were net buyers. The cumulative net outflow during the other six days were Rs 3,019 crore.