Will DIIs cushion market in case of big FII outflow this time? Watch these stocks – 19 Nov 2016

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The mutual fund industry has often come to the rescue of the domestic equity market in recent times whenever foreign institutional investors (FIIs) have turned net sellers.

After remaining net buyers in the domestic stock markets since April this year, FIIs have sold shares worth of Rs 13,199.68 crore (net) in the past one-and-a-half months till November 16. On the other hand, net investment of domestic institutional investors stood at Rs 16,408.33 crore during the same period.

Market experts point out that the rising probability of an interest rate hike by the US Federal Reserve in the near term and firm bond yields in the US are taking foreign investors money away from emerging markets since October.

Fed Chair Janet Yellen on Thursday said a rate hike is likely ‘relatively soon’ if the American economy continued to show signs of improvement.

During April-September, FIIs poured in Rs 46,797.89 crore, whereas domestic institutional investors turned net sellers and sold shares worth Rs 5,820.77 crore during this period.

Rajeev Thakkar, CIO and director of PPFAS Mutual Fund, said, “More domestic savings in mutual funds in the form of SIPs are reflecting in the mutual fund inflows to equities. However, we are sitting on 10 per cent cash in the present market conditions. Expectation of a rate hike by the US Federal Reserve and robust bond yields are putting pressure on foreign money. In the long term, I believe things will settle down and we will see a market
revival by December 2017.”

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