Markets see largest one-day FII pull-out of Rs 5,300 crore

Interestingly, net buying by domestic institutional investors showed a sharp spurt of Rs 5,196 crore

Foreign investors on Thursday offloaded shares worth Rs 5,328 crore — the largest in a single session — but the markets managed to end with gains, thanks to support from domestic institutions. 

Provisional data from stock exchanges showed foreign institutional investors (FIIs) extended their selling streak for a ninth straight day. Foreign funds pulled out Rs 9,900 crore during the period.

Interestingly, net buying by domestic institutional investors (DIIs) showed a sharp spurt of Rs 5,196 crore. The market buzz suggested state-owned Life Insurance Corporation (LIC) and some large mutual funds (MFs) went aggressive.

“In the past seven sessions, the markets came down sharply. It is likely the Centre nudged LIC and other deep-pocket investors to buy aggressively, to stabilise the market,” said a broker.

The trading volume in the cash segment of several stocks was higher than normal. Typically, a large FII or DII buying or selling figure, as seen on Thursday, happens when there is a large block deal in a blue-chip stock. In the recent past, FIIs pulled out over Rs 5,000 crore in a session only twice, in 2013 and 2015. On both occasions, it was on account of block deals.

“The across-the-board surge in volumes and lack of any big block deals suggested some big-ticket FIIs offloaded their positions. Interestingly, there was enough counter-buying support; otherwise, the markets would have tanked,” said an official on the trading desk of a brokerage.

Market players said more clarity would emerge on the huge sell-off once the markets regulator releases final data on Friday. In a hectic day of trade, amid expiry of September series derivatives contracts, the BSE’s benchmark Sensex managed to recover from early losses to close 123 points or 0.4 per cent higher, at 31,282.5. The index managed to end its seven-day losing streak, during which it lost close to four per cent.

Market players said it was not surprising to see LIC stepping up buying. LIC is known to be a contra-player in the market. In other words, it buys when the markets enter correction mode and books profit in an upswing. So far this year, the insurance giant is said to have been a net-seller, amid a sharp 20 per cent rise in the benchmark indices. On a month-to-date basis, FIIs have pulled out around Rs 12,500 from domestic stocks, while MFs have been strong buyers of Rs 17,450 crore. Daily buying and selling numbers for insurance companies are not published separately.