Friday, May 19, 2006

Who is selling big ? Institutions are not.

NSE Nifty declined by a phenomenal 13.5 per cent over the last seven trading sessions. During this period, FIIs turned sellers. Their net sales amounted to Rs.3,676 crore. But, at the same time, MFs were net buyers to the tune of Rs.2,372 crore.

Total institutional activity turns out to be: FIIs + MFs = -1,304 crore (ie. -3,676 + 2,372).

Net sales of Rs.1,304 is too small an amount to result in a 13.5 per cent decline. Then why did the benchmark indices fall at such an alarming rate ? And more importantly, who is selling big, if not the institutions (taken in aggregate) ?

Any ideas/guesses ?

4 comments:

sinnerMan said...

Could it be individual investors who have received margin calls? According to this article in the Economic Times, it could also be banks who have hit their stop loss orders.

http://economictimes.indiatimes.com/articleshow/1539479.cms

I am in agreement with you that this could represent a buying opportunity.

Anonymous said...

What about derivatives? How is the institutional activity there?.

Ravi Purohit said...

Anonymous: MFs are not really allowed to invest in the F&O market (i think they were allowed v.v.recently). So their data is not really available.

FIIs constitute a small portion of the F&O market. I think the Feb NSE F&O update indicates that FIIs have around 12-14 odd per cent share. So I am not sure if institutions on their own can substantially influence the F&O market too much.

Nevertheless, here are the numbers for the FIIs on the FO market:

Net (upto 16-May): -3,600cr
Net (17-19 May): + 3,236cr
----------------------------
Cum. (upto 19-May): -396 cr.
----------------------------

Looking at the data, my question remains: Who is selling big?

-
Ravi.

Animesh said...

Nice question.

Maybe volumes data will give us some clue. Or should we ask IGF to explore this fall?