DIIs exit even as FIIs return with a bang

Domestic institutional investors (DIIs) were net buyers of Indian shares for most of the past 14 months till February this year. They were net sellers only in January and October 2015. Based on provisional figures till March 16, 2016, DIIs were net sellers to the tune of Rs 5,400 crore after the Budget, the highest sales in 13 months. If the selling continues, it will break the four-month buying trend of DIIs.

In October 2015, DIIs sold shares worth Rs 1,760 crore, whereas in January 2015, they sold shares of Rs 7,882 crore, both on a net basis. Incidentally, markets were at their all-time highs in January-February 2015 period and, since then, have gradually moved lower over the past 14 months. So, it's unlikely that the recent trend is of profit-booking, but could be attributed to redemptions at fund houses.

In contrast, foreign institutional investors have been net buyers to the tune of Rs 9,069 crore in the Indian market in March 2016 so far. Experts say the trend indicates the return of risk appetite of foreign investors, following easing liquidity conditions globally, which they believe is likely to continue in the near-term.

In February, foreign investors had sold shares amounting to Rs 27,659 crore in January and February 2016. Besides the global shift towards risk, the government's move of sticking to the fiscal-deficit target and giving a push to rural economy in the Union Budget also buoyed sentiment and reinstated confidence of foreign investors. If the trend continues, it will break their four-month selling spree in Indian markets. Between January 2015 and February 2016, FIIs have been net sellers of Indian shares in eight of the 14 months.