Insurers turn net buyers in Feb after pulling out $5 billion

Written by fe Bureau | Mumbai | Updated: Mar 11 2014, 11:09am hrs
Insurance companies ended their 5-month selling spree as they turned net buyers at $323 million in February. They had sold nearly $5 billion between September, 2013 to January, 2014.

According to experts, domestic players have been selling to book profits in a range-bound market. Overall, the markets have remained at the same level. So, market participants are trying to book profits at every opportunity, said Dr Nirakar Pradhan, CIO, Future Generali Life Insurance. The BSE benchmark, the Sensex has shed 1.41% over the last 5 months.

Insurers sold $1 billion worth of equities in September 2013. In October ($1.36 billion), November ($1.38 billion) and December ($1.15 billion), they sold over a billion worth of equities. In January, insurers limited their selling to $35 million.

In year-to-date, domestic institutional investors (DIIs) have remained net sellers at $200 million. On Monday, they sold another $168 million worth of equities, highest outflow for the year. Meanwhile, foreign institutional investors (FIIs) have been on a buying spree, taking their total net investments to $1.7 billion over the last 18 sessions. On Monday, the overseas investors bought another $205 million worth of equities, according to the BSE provisional data.

Market observers feel domestic players are likely to revive their buying post the elections. Lack of a firm trend in macro-fundamentals is keeping sentiment and markets range-bound, possibly explaining the lower conviction levels and the lower volumes in the market. This is likely to continue till the elections, said Lalit Nambiar, fund manager, UTI AMC.

Analysts feel market participants have been cautious on markets due to disconnect between earnings as well as economic growth and the market rally.