Domestic Institutions Are Booking Profits In The Present Market Rally

Domestic institutions are beginning to sell in the Indian markets, even as markets look to hit a new record high. Domestic institutions have net sold in the markets to the tune of Rs 6,789 crores, so far in November. In fact, last week on Thursday and Friday they have net sold to the tune of more than Rs 5,000 crores. Some domestic institutions including mutual funds would prefer sitting on cash and waiting for lower levels to invest.

Foreign Portfolio Investors in the meantime are busy buying Indian stocks with these institutions buying stocks worth Rs 14,000 crores so far in the month of November.

The sudden buying by Foreign Portfolio Investors has lifted Indian stocks to near record highs. The belief that the US President elect Joe Biden would have policies that are favourable to India has lifted market sentiments.

It's likely that we may see further buying interest from Foreign Portfolio Investors which could propel the markets even higher from these levels.

One of the other reason why individual investors and FPIs have latched onto stocks is the sharp rebound in earnings seen for the quarter ending Sept 30, 2020. Most economists are now expecting a "V" shaped recovery for the economy.

Meanwhile, markets like the US too have rallied and are a few per centage points from hitting record highs.