HNIs net buyers amid volatility with Rs 1,392-cr inflows in 15 sessions

On Monday, March 16 at 11:30 am, as the markets began a week that would see the S&P BSE Sensex fall below the 30,000-mark, a well-known firm with a large number of high net-worth clients had a conference call. It advised them to boost equity allocations.

At least some high net-worth individuals (HNIs) seem to have been of a similar view. They have been buying amid the general weakness that has characterised March, barring the last few sessions. The Sensex has jumped around 15 per cent in the last three days, though at 29,946.77 (as of Thursday’s close), it remains shy of the 30,000-mark and 29.2 per cent off its peak of 42,273.87 attained on January 20.

The exchange data shows a continuous buying worth Rs 1,391.6 crore in the last 15 sessions. They were net buyers in each of these sessions. This contrasts Rs 4,790.9 crore in net sales since January 1. The analysis is based on the BSE data, which gives details of category-wise turnover. The category 'clients' comprises non-institutional flows. Non-resident Indians (NRIs) and proprietary traders are also excluded, which leaves retail investors and HNIs.

 

The bulk of the buying by value is likely to be from HNIs, a market expert said, as they tend to dominate in terms of the value of purchases because of the size of their portfolios.

There has also been some selective rise in flows into portfolio management service (PMS) schemes and alternative investment funds (AIFs), according to industry watchers. “We are getting a few top-ups to the PMS scheme and subscriptions to equity-linked AIFs,” said Nimish Shah, head of investments at BNP Paribas Wealth Management. He said investors, who have the cash, are looking to gain equity exposure by buying into large-cap companies in a staggered way after the recent fall. Select small-cap and mid-cap valuations are also seen to be especially attractive.

Daniel G M, founder-director at industry-tracker PMS Bazaar, said some portfolio managers have outperformed on a relative basis, selectively drawing in investors. “That flow is there,” he said, though the overall flow remains below the levels seen before regulatory changes, including the doubling of minimum investment to Rs 50 lakh.  

 

Most clients invest in discretionary PMS schemes, where the fund manager makes investment decisions. Other segments involve the portfolio manager acting according to client directions or providing advice.

“People are scared... They don’t know which way it (the indices) will move. Some people who were there in the market for a long time are putting in money,” said Satish Menon, executive director at Geojit Financial Services.

The recent market fall is reflective of economic dislocations and earnings pain, which will play out over a longer term, according to a March 25 strategy report from brokerage firm Edelweiss Securities and authored by analysts Aditya Narain, Prateek Parekh and Padmavati Udecha. It noted that the fall is likely to continue for now and some sectors like pharmaceuticals (pharma) and information technology (IT) are likely to be leaders in the days ahead.

“We...call a reset of sector and company leaders; pharma, IT services, and telecom could well be leaders, dividend yield and absolute value are great...(risk-adjusted)...trades; financials will lag in the consolidation phase,” it said.