Both domestic institutional investors (DIIs) and mutual funds (MFs) turned net-sellers after 18 months in August. Between March 2021 and July 22, the former had pumped in Rs 3.65 trillion and the latter Rs 2.55 trillion. MFs are a subset of DIIs, which also includes insurance companies and pension funds.
The selling by domestic institutions comes amid a reversal in FPI flows. In August, FPIs pumped in Rs 65,859 crore into domestic stocks — most since November 2020. This was the second straight month of positive FPI flows. In July, they had bought shares worth Rs 6,720 crore. Between October 2021 and June 2022, FPIs had withdrawn a record Rs 2.5 trillion. DII flows during the same period stood at Rs 2.99 trillion. This helped offset the sharp selling by FPIs and cushioned the market fall. In August, the selling by MFs was muted at just Rs 1,642 crore.
The total DII outflows, however, stood at Rs 7,069 crore. Market players said domestic institutions decided to take some money off the table following the sharp rebound in the markets from their June lows. The Nifty50 last closed at 17,539, up 15 per cent from this year’s low of 15,294 on June 17. On a year-to-date (YTD) basis, the Nifty50 is up just 1 per cent. Interestingly, FPIs have sold shares worth Rs 1.45 trillion and MFs have pumped an almost equal amount of Rs 1.44 trillion YTD.
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