The Hindu Business Line : Domestic investors pull out Rs 16,000 cr

THE sell-off on Thursday may have attracted the attention of all and sundry. Domestic investors, however, have been pulling out money from the market since the beginning of June.

Since June, domestic investors have made net sales of Rs 16,000 crore in the NSE alone.

During the same period, foreign institutional investors (FIIs) made net purchases of Rs 22,900 crore. Even on Thursday when stock prices corrected, FIIs' net purchases were about Rs 514 crore, while net sales of domestic investors were Rs 240 crore.

That domestic investors have been selling is not a surprise though. When FIIs buy, there has to be another Indian party, which sells. Aggregation of data of domestic investors would consequently be negative when FIIs buy. Surprisingly, sellers are not only non-institutional investors ( such as promoters, companies and retail investors), but also insurance companies, brokers and banks. Brokers and banks have, in particular, pulled out close to Rs 1,000 crore each since June from the NSE alone.

The total net sales also represent what domestic investors have taken out from the market; this could find its way into the market again through public offers and mutual funds.

The data also clearly illustrates that domestic insurance companies, notwithstanding their size, are not significant players in moving markets.

For instance, while LIC alone holds stocks worth Rs 64,000 crore, 700 FIIs together hold stocks worth Rs 3,00,000 crore. Domestic financial institutions, including LIC, have put through trades worth less than Rs 10 crore everyday in September; that figure stands at Rs 2,500 crore aggregated across all FIIs. Incidentally, mutual funds have been buying along with FIIs since July. With inflows into newly launched fund offers increasing, mutual funds have accompanied FIIs in their buying spree.

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Domestic investors pull out Rs 16,000 cr — Net sales on NSE since June