DIIs Buying Crucial For Markets

Finally, we see a meaningful drop in share prices after an eightmonth steady rise in India. The correction may continue, as per market pundits, and the more it corrects, the more attractive the stocks start looking. 

The Indian markets underperformed the US markets, German DAX, French CAC 40 and Japanese Nikkie if we consider the past two weeks. In fact, Nikkie was the best performing index in the past couple of weeks as the index gained more than 4 per cent for the period under consideration. 

Dow Jones Industrial Average was up by 1.08 per cent, DAX gained 0.96 per cent and CAC 40 was up by 1.75 per cent over the last 15 days. FTSE 100 struggled owing to the UK downgrade by the Moody’s. S&P downgraded China and the equity markets in China struggled, which led to its underperformance. 

Sensex slipped by 0.80 per cent and Nifty was down by 1.33 per cent in the past couple of weeks. IT index was the only sectoral index to trade in the green, with the index gaining 1.05 per cent. Realty index was the worst performing sectoral index and was down by nearly 9 per cent. Metal index got pounded the most after realty and was down by a whopping 6.22 per cent. Power, Bankex and FMCG indices were down by more than 2 per cent each. 

The FIIs remained net sellers to the tune of Rs 10063.51 crore over the past couple of weeks, while the DIIs continued their buying spree in the market and remained buyers to the tune of Rs 8427.07 crore. The heavy selling from the FIIs was neutralised by the continuous buying by the DIIs. 

The past two weeks saw listing of Capacite Infraprojects and Matrimony. com. Capacite Infraprojects saw huge response from the investors but the listing gains were slightly below the expectation of the investors as poor market sentiment pushed the stock prices downwards on the first day of listing. Matrimony had a disappointing listing as the share got listed at a 8 per cent discount to its issue price. The upcoming weeks will be abuzz with IPOs of SBI Life Insurance and ICICI Lombard General Insurance Company Ltd. 

Markets may have taken support near the 9720 level in the short term, but the probability of markets sliding further down cannot be ruled out. The only silver lining is the DIIs buying interest in the markets and their appetite for small and mid-cap stocks.

The FIIs seem to be withdrawing money from Indian markets and parking their funds in other emerging markets that are looking relatively cheaper.