Domestic institutional investors (DIIs), who had invested large sums in Indian equities in calendar year 2018, have become net sellers in 2019 so far. The total selling by DIIs was at Rs 16,537.2 crore till May 7. “Except SIPs, other flows have slowed,” said AK Prabhakar, head-research, IDBI Capital. Domestic institutions, net seller, SIP, Sebi, Federal Reserve, FPI, foreign portfolio, market, financial express, financial express newspaper, financial express today
A research head of a stockbroking firm said that due to markets regulator Sebi’s circular in October 2018 on commission, many distributors were not encouraged to sell mutual funds because of a ban on upfront commission. The investment by DIIs includes mutual fund houses, banks, financial institution and insurance companies.
In calendar 2018, FPIs which continued to sell have been net buyers, pouring a staggering Rs 57,464.21 crore till May 7. The US Federal Reserve had also indicated about its interest rate hiking for 2019 and 2020.
“However, in its March 19 meeting, much to the delight of financial markets, US Federal Reserve has stated that no more hikes are expected in 2019 and only one possible hike in 2020. This has also triggered gush of liquidity rushing into equity asset class globally,” added Kotak Institutional Equities.
Foreign flows and the renewed hope of the current ruling party getting a majority in the forthcoming general elections fuelled sentiments leading to a rally, KIE added. Inflow was strong due to factors like FII flows in most of the emerging markets, strong GDP growth, expectation of a stable government at the Centre, dovish Fed and under-ownership by FPIs of Indian equities.
Analysts had earlier predicted that FPI flows would grow further irrespective of the rupee being weak. However, from the highest monthly inflows of Rs 32,371.43 crore in March, net investments slowed to Rs 12,749.5 crore in April.
According to a report by ICICI Securities, FPIs’ turned net buyers in banks in February this year. However, the Nifty Bank index was flat over February 2019 as the buying was due to large stake sales, such as the ING stake sale in Kotak Mahindra Bank, SUUTI stake sale in Axis Bank and Bharat 22 ETF FFO (includes Axis, SBI and other PSU banks).