The Hindu Business Line : Domestic institutions, retail traders capitalised on big fall

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Domestic institutions, retail traders capitalised on big fall

FIIs pulled the markets down: Analysts.

Our Bureau

Mumbai, July 7 Retail and domestic institutional investors took some advantage of the six per cent dip in the benchmark indices on Monday, the day of the Budget.

Mr Unni Nair, a retail investor from Mumbai, said he was quite happy with the Budget, and that he used the dip in the market to pick up a small quantity of a couple of stocks.

“The announcements made on personal taxes, for women, etc, were rather good. The ordinary person is very happy with the Budget. I was expecting a correction and when it did happen on Monday, I did buy a couple of scrips. I am rather bullish about the stock markets and am confident that the Government will come out with some big bang announcements soon.”

Retail investors are putting their money into infrastructure and banking. “A few days back I did put my money into GMR and IRB because infrastructure is the segment to watch out for with all the announcements made,” said another retail investor who did not want to be named.

Some retail investors said they had been advised to buy only after the Budget. A techie from Hyderabad, who actively trades and manages portfolios for some of his friends, said he expects the markets to dip further and that was why he did not buy on Monday. “I will be investing my long-term money some time this week, and for the short-term, I will wait and watch.”

Though the Sensex tanked by 869 points on Monday, retail investors bought equity worth Rs 446 crore in the net (on BSE), while domestic institutions bought for Rs 815 crore (BSE and NSE). It was the FIIs, whose net sales of Rs 1,483 crore, who pulled the markets down said analysts.

Marketmen said the dip in the markets provided an opportunity for the domestic institutional investors (DIIs) and retail investors to buy at lower levels. “Much of the buying happened after 2.30 p.m. because that is when the markets were trading at their intraday lows,” said Ms Anita Gandhi, Head of Institutional Broking at Arihant Capital Markets.

Talking about mutual fund investors’ behaviour on the Budget day, Mr Rajat Jain, Chief Investment Officer at Principal PNB Mutual Fund, said there was nothing extraordinary, and that the inflows were normal. He said his fund did not buy on Monday. “When the Sensex fell by around 900 points many retail and HNI investors bought more shares of companies in their portfolio to average out the price.”

On Tuesday though, inflows were subdued from the retail counter; they net sold for Rs 8 crore on the BSE. DIIs bought equities worth Rs 790 crore on both the premier exchanges, while FIIs were net sellers again on Tuesday, for Rs 921 crore.

Marketmen said the FIIs had done a lot of basket selling on Monday.

They sold in the derivatives segment too on Monday. FIIs offloaded Rs 1,745 crore in the F&O segment. Due to this heavy selling several stock futures closed in discount with respect to their underlying stock prices. Their trading activity perked up quite sharply, particularly in the option segment which has been high in 2009. They bought Rs 7,105 crore worth of options and sold Rs 7,704 crore, resulting in net sales of about Rs 600 crore. The increase in put/call ratio suggests that they sold (writing activity) call options and bought put options.

They were net sellers in index futures by Rs 983 crore and in stock futures by Rs 172 crore, but made a meagre purchase of Rs 9.33 crore in stock options.