While just a month back, market pundits cited increased market polarisation with blue chips being the focus of FII interest, the buying has winded in the recent past with an increase in the number of stocks that are traded on the leading exchanges BSE and NSE. At the index level as well, the number of constituents participating in the market momentum has improved, given that as many as 45 Nifty stocks now trade above their 200 Day Moving Averages (DMA), the highest since January 2013.
The increased interest in mid-cap stocks has coincided with a spurt in the cash market activity with the average turnover of the segment scaling a two-year high. While it cannot be ruled out that domestic retail investors may be exiting the markets that has remained flat since 2008, the rising mid-cap index has raised hopes that a section of this investor class has entered the market. During the last one week, the BSE mid-cap index has closed in on its yield gap to Sensex for the last six weeks. However, sustained selling action by the domestic institutional investors that are deemed big drivers of the mid-cap space can act as a hindrance to the mid-cap rally. For the year so far, DIIs have sold stocks worth $ 243 million even as FIIs have shopped for $3.8 billion worth of Indian equities.