Domestic institutional investors (DIIs) have emerged as strong support pillars of the markets, but it is only mutual funds within this segment that have been aggressive buyers of equities. On most days while mutual funds are net buyers, other DIIs like banks, insurance companies along with AIFs and PMS are mostly net sellers as per data from SEBI and NSE.
Take for instance May 7, which was also the first trading session after Operation Sindoor was launched. Data shows that mutual funds were net buyers at more than Rs 2,900 crore even though the cumulative DII net flows were pegged at only Rs 2,586 crore.
Data from NSE further shows that banks were net sellers on May 7 at nearly Rs 967 crore while insurance companies along with PMS firms also ended the day as net sellers.
Most days of the current month has witnessed a similar pattern. Mutual funds were net buyers at Rs 5771 crore on May 9 while cumulatively DIIs were net sellers at Rs 3,798 crore.
Experts attribute this trend to the fact that mutual funds are flush with funds – the SIP net flows in April was a record Rs 26,632 crore – and ready to deploy after the recent correction even as other categories are adopting a cautious mode.
“Most categories of domestic institutional investors are still in a wait-and-watch mode as there is still a lot of volatility and uncertainty due to war and tariff issues,” said Manish Sonthalia, Director & CIO, Emkay Investment Managers.
“For mutual funds, it is a different case, as they are getting huge fresh flows every month and so they have to deploy,” added Sonthalia.
According to another CIO of a domestic AIF firm, there are redemption pressures as well that is making fund houses – mostly AIF/PMS -- press the sell button on most days.
Earlier in the year as well, mutual funds have been the largest contributor in terms of net flows from the DII pack. In April for instance, the cumulative net inflows of mutual funds accounted for a little over 75 percent of the overall DII inflows. While it dipped in March, the share of mutual funds was a high 64 percent and 75 percent in January and February, respectively.
In May, the share of mutual funds net flows is currently pegged at around 58 percent of the cumulative DII flows.
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