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Domestic institutional investors (DIIs) net-bought shares worth roughly Rs 4,000 crore in the past five days, their highest purchases in a trading week over a year.
Fund managers said insurance companies and mutual funds (MFs) turned buyers, as the recent correction, led by foreign institutional selling, provided opportunities to pick stocks at cheaper valuations.
“Domestic institutions have been huge sellers since May 2012, particularly insurance companies. Any large correction, therefore, is an opportunity to buy into the market,” said Aneesh Srivastava, chief investment officer, IDBI Federal Life Insurance.
DIIs have been buying consistently for the nine sessions since June 11. This coincides with the decline in the benchmark indices by 3.4 per cent and a drop in the rupee by 1.8 per cent in the period. Domestic institutions have net-bought shares worth Rs 6,544 crore since June 11. Foreign institutions, which had poured almost Rs 84,000 crore into Indian equities till early June since the year began, sold shares worth Rs 7,979 crore.
Fund managers said the decline in the market gave DIIs an opportunity to turn buyers, as they’d been sitting on cash for a while “Many domestic institutions have been sitting on higher levels of cash. The equity market at these levels provides attractive valuations for these institutions to park the excess cash. Further buying would depend on the availability of this surplus cash,” said Hemant Kanawala, head, equity investment, Kotak Life Insurance.
Market participants said a large part of the buying was done by insurance companies and MFs were still experiencing redemptions at their end. “Redemptions in the market have continued as markets have not given any tangible returns to investors. This is why at every rise in the market, we have seen redemptions,” said Kaushik Dani, head – equity, Peerless MF.
