DIIs selling accelerates amid FPI buying surge; sell Rs 9,383-cr shares

Domestic funds have pulled out Rs 9,383 cr this month, most since Feb'21

Domestic institutional investors (DIIs) have stepped up the­ir selling this month, taking ad­vantage of the abundant li­q­u­idity and attractive stock prices. So far this month, DIIs have sold shares worth Rs. 9,383 crore —the highest monthly selling since February 2021, wh­en they had yanked out Rs. 16,358 crore.

Both during February 2021 and this month, foreign portfolio investors (FPIs) were str­ong buyers and the markets had rallied despite the DII selloff. In February 2021, the Sen­sex had rallied 6.6 per cent as FPIs had poured in Rs. 21,960 crore. So far this month, overseas funds have bought shares worth Rs. 22,594 crore and the benchmark Nifty has gained nearly 4 per cent.
 

DIIs largely comprise domestic mutual funds (MFs), insurance companies, provident funds and pension funds. The buying and selling data for MFs is also available separately but with a lag. They had bought shares worth Rs. 1,650 crore this month until July 13. Experts attribute the selling by DIIs and slowdown in purchases by MFs to profit taking and moderating investments in equity MFs.
 

“We had seen strong domestic inflows to the tune of around $36 billion last year (2022), more than offsetting FPI outflows ($17 billion), supported by robust MF equity inflows. This year, though, SIP flows have remained resilient so far. We are seeing signs of moderation in non-SIP contributions to mutual funds and net SIP-folio additions. This has impacted DII fund inflows in recent months to some extent,” said Kunal Vora, head of India equity research, BNP Paribas, in an interview with Business Standard recently.
 

Compared to last calendar year, both DIIs as well as MFs ha­ve slowed their purchases in 2023. In 2022, MFs had pum­ped in Rs. 1.86 trillion, while DIIs bought shares worth Rs. 2.77 trilli­on amid a rise in share of financial assets in household savings. The strong buying by DIIs had proved a solid counterweight to FPI selling. In 2022, FPIs had pulled out Rs. 1.25 trillion from domestic equities. Des­pite that, the Nifty managed to rise 4.32 per cent this year.