Mumbai: On a net basis, while the overseas investors are buyers of Indian equities to the tune of Rs 32,300 crore this year, a closer analysis of their daily trade shows that they have reduced their average daily gross purchases during the month of April while significantly increasing their average daily gross sales during the period.
This suggests that some section of the foreign institutional investors (FIIs) have taken a little cautious approach as the announcement of the Lok Sabha poll results are drawing closer.
As compared to March 2014, FIIs have trimmed down their average daily gross buying by around five per cent while they have significantly increased their sales by almost eight per cent.
“What we can infer from this is that FIIs who had entered the market before the state Assembly elections held last year and continuing to hold onto their positions have taken the recent buoyancy in the market to take some profit off the table and reduce their positions,” said Arun Kejriwal, director, Kejriwal Research and Investment Service (KRIS).
As a result of the increase in daily selling by overseas investors, their net buying in the month of April have come down to Rs 9,602 crore as compared to net inflow of Rs 20,077 crore received during the month of March.
With the rupee remaining stable during the last few months, Mr Kejriwal pointed out that short term players who prefer to invest in the Indian market by taking a view on the rupee movement have also reduced their activity in the domestic market.
According to Gopal Agrawal, the head of equity at Mirae Asset Global, foreign investors are resortisng to sectoral rotation by selling in one sector and buying stocks in other sectors, which have the potential to register impressive growth going forward.
Taking a different trading strategy, analysts at foreign brokerage firm, Credit Suisse had suggested to their clients to sell in May and enter the market in late June.
“While the old adage is ‘sell in May and go away’, we suggest to investors who sell in May to buy back in late June/early July,” the foreign broking house said.
