In a significant shift from their year-long buying trend, domestic institutional investors (DIIs) have offloaded over Rs 7,000 crore worth of equities in the first seven trading sessions of 2024. This move follows a prolonged bull run, prompting investors to capitalize on profits and fortify their cash reserves for potential market downturns. Analysts suggest that the recent surge in domestic markets, combined with the anticipation of market corrections and attractive valuations in the future, influenced DIIs to transition from buyers to sellers.
Data sourced from the National Stock Exchange (NSE) reveals that between January 1 and 9, DIIs were net sellers in four out of seven trading sessions, selling a cumulative amount of Rs 7,036 crore in Indian shares. The recent months witnessed record-breaking rallies in both Sensex and Nifty, prompting investors to act prudently and convert unrealized gains into tangible profits.
Prashanth Tapse, a research analyst and senior vice-president of research at Mehta Equities, noted, “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 realize gains and convert them into actual profits.”
DIIs displayed robust support for Indian equities in 2023, investing around Rs 1.81 lakh crore, marking their third consecutive year of steadfast support. The previous years saw investments of Rs 2.75 lakh crore in 2022 and Rs 1 lakh crore in 2021. In contrast, foreign investors have infused around $560 million into Indian equities in the early weeks of 2024, a stark difference from the substantial $21 billion invested throughout 2023.
As DIIs adopt a more cautious stance, aiming to secure cash and await potential market corrections, analysts anticipate further profit-booking. The optimism prevailing during the strong two-month surge is slightly tempered by mixed US economic data and indications of delayed rate cuts from the US Federal Reserve. Investors are also exercising caution ahead of the commencement of Q3FY24 earnings.
