DIIs turn to selling, take out over Rs 7,000 crore from equities in 7 sessions

Foreign investors have bought around $560 million so far 2024.

After a year-long buying binge, domestic institutional investors (DIIs) sold off over Rs 7,000 crore of equities in the first seven trading sessions of the new year 2024.

Data from the National Stock Exchange (NSE) showed that between January 1 and 9, DIIs sold Rs 7,036 crore in Indian shares. They remained net sellers for four out of seven trading sessions.

Analysts believe the recent bull run led the investors to book profits and beef up their cash reserves for potential future dips. Some selling might have also been influenced by investors' redemption pressure, driven by similar thoughts about market movements.

"Domestic markets have seen the best rally in the last 3-4 months and investors believe that equities don't move in a straight line and, hence, the ongoing volatility can come to vanish unrealised gains. Both Sensex and Nifty have scaled new all-time highs multiple times in recent months with FII and DII trading with opposite views," said Prashanth Tapse, research analyst and senior vice-president of research at Mehta Equities.

"Considering the eventful months ahead, be it regarding Q3 results, Union Budget, Fed action on interest rates, and the Lok Sabha elections over the next 4-6 months, Domestic investors wish to book profits to realise gains and convert them into actual profits," Tapse added.

In 2023, DIIs invested around Rs 1.81 lakh crore, marking their third consecutive year of steadfast support for Indian equities. The previous year, in 2022, their investment totalled Rs 2.75 lakh crore, while in 2021, they had bought around Rs 1 lakh crore worth of Indian equity shares.

Foreign investors have pumped around $560 million into the Indian equities so far this year, compared to a meagre $21 billion in whole of 2023. Currently, DIIs seem inclined to secure cash by reducing their investments, anticipating future market corrections and more appealing valuations for future deployment, most analysts argued.

Sneha Poddar, an analyst at Motilal Oswal, anticipates more profit-booking because of fair valuations after a strong two-month surge. Recent mixed US economic data and indications from the US Fed regarding delayed rate cuts have slightly tempered the optimistic mood. Additionally, investors are exercising caution ahead of the commencement of Q3FY24 earnings.

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