For the month of February while FIIs have made net purchases of Rs 10,310 crores until February 17, 2012, domestic institutional investors have gradually offloaded shares with net sales at Rs 5769 crores until February 17, 2012.
While foreign institutional investors are flush with funds and prefer to stay invested, domestic institutional investors and mutual funds prefer to take profits and hold cash. This may hold them in good stead as they could make purchases when a correction in the market sets in and reap the benefits of lower valuations. Also, there has been an increasing trend of investments into debt by domestic institutional investors and mutual funds – a trend that is unlikely to go way on account of prevailing high interest rates.
Going forward, it is likely that DIIs and mutual funds would continue to sell if the markets keep going higher. FII investment of course would depend on a host of factors including the global liquidity situation, the crisis in Greece etc.