Chart of the day: Locals book profits as foreigners buy

Domestic institutions continue to book profits even as foreign funds have been consistent buyers since the beginning of this calendar. It is not clear what is prompting the local players to cash out: unsustainable valuations or redemption pressures? Inflows into ULIPs have shrunk considerably and investors in mutual funds appear to have lost patience after having had to endure prolonged underperformance. If the decision to book profits is a strategic one, then local fund managers will have the cash to take advantage of any sharp correction. But if the market continues to climb, and fund managers are sitting on cash, they may be compelled to chase prices.

See the chart below. All figures Rs in Cr. Duration: 1st Jan 2012 to 17th Feb 2012.