The intense selling carried out by foreign institutional investors (FIIs) seem to have stemmed post Budget. Foreign investors, who had sold shares worth over Rs 10,000 crore before the Budget, have turned net buyers to the tune of about Rs 2,000 crore post the Budget in the cash market.
Meanwhile, domestic institutional investors (DII), who had put in big bucks so far in 2011, have net bought less than Rs 200 crore since the Budget. The benchmark Sensex has gained about 3.5% since the Budget on February 28.
?The Budget has had a positive effect on the market. Heavy selling by investors has stopped with the markets have corrected sharply this year,? said Vikas Khemani, head institutional equities, Edelweiss Securities. ?The low fiscal deficit number, even though it looks difficult to achieve, has been taken positively by investors, as they look at the headline number,? he said.
?The Budget was taken positively by investors,? said Apurva Shah, head of research, institutional equities, Prabhudas Lilladher. ?Also, there was a huge sell-off before that which has now been stemmed.?
The market was positively surprised by the relatively low fiscal deficit target of 4.6% of GDP announced in the Budget although most expert feel the government will struggle to achieve the target.
According to the data collected by the NSE and BSE, domestic institutions have net bought stocks worth over Rs 11,100 crore this year, while the foreign investors have sold shares worth Rs 8,134.4 crore in the cash segment. DIIs include banks, domestic financial institutions, mutual funds and new pension systems.
DIIs inflows into the stock market has been higher this year as buying has emerged at lower levels from insurance companies.
Also, after sustained selling, net inflows are back into equity mutual fund schemes in the last three months.
However, despite the quantum of DII buying being more than that of selling by FIIs, they have not been able to support the Indian market, which is down more than 10% so far in 2011.
?The market could remain range-bound over the next couple of months and could deliver good returns in the second half of the calendar year,? said Shah.