DIIs buy more as foreign investors hit exit mode

CHENNAI: Even as foreign institutional investors (FIIs) are pulling out money sending the markets into a tailspin, their domestic counterparts continue to buy shares. Domestic institutional investors (DIIs), which include mutual funds (MFs), insurance firms and financial institutions, have made net investments of about $1.27 billion in equities in the past two weeks alone.
DIIs have remained net investors (higher purchase of shares than sales) in the last ten trading sessions, BSE data showed. They have made net investments of about Rs 7,500 crore in stocks so far in June. FIIs on the other hand net sold stocks to the tune of Rs 6,714 crore in June (till June 21), data with market regulator Sebi showed. They invested a whopping $15 billion into the Indian markets between January and mid-June.
"Valuations have become reasonable as the markets have corrected," said Kaushik Dani, head, Equities, Peerless Mutual Fund (MF). "It presents a good opportunity to buy (shares)," said V Balasubramanian, vice-president and fund manager, IDBI MF. The markets are trading at about 13.5 times estimated earnings for 2013-14, which is lower than the historical average, he said.
Domestic institutions look for larger volumes and with trades getting bigger after the FII pullout there has been a renewed buying interest, market observers said. "As the broader indices are near the oversold zone, we could start seeing smart money coming in for value based buying," said Milan Bavishi, head, Research, Inventure Growth and Securities.
The sell-off by FIIs has been much higher in the debt segment. Overseas investors are pulling out from the debt segment in a big way as the weak rupee has eroded gains significantly. FIIs have net sold debt securities worth around Rs 29,190 crore (about $5 billion) in June alone.
They have remained net sellers in the debt segment in all but one trading session in the month, Sebi data showed. Domestic investors had sold more shares than what they bought on the bourses all through the current year. They net sold stocks worth nearly Rs 49,000 crore in January-May, data showed.