Markets brace for January storm as retail, institutions face off in derivatives
₹66,135 crore in December stand at a record high for any month, as per National Securities Depository Ltd (NSDL), while exchange data shows DIIs bought net ₹12,942 crore worth of shares during the month. The same data for BSE and NSE shows clients sold shares worth ₹14,633 crore in December. On an annual basis, too, while FPIs purchased a record ₹1.71 trillion worth of shares in calendar year 2023 and DIIs bought ₹1.85 trillion, clients sold ₹72,921 crore worth of shares in the secondary market.
Even cash market activity on BSE and NSE shows that while institutions have been bullish, clients or retail/high net-worth individuals (HNIs) have booked profits in the calendar year, which has seen the Nifty jump 20% to close at 21,731.4 on 29 December. Chandan Taparia, senior vice-president, derivatives research, Motilal Oswal Financial Services, feels that in January, volatility could be high due to the ongoing ‘conflict’ between the two classes of investors. He expects Nifty to trade in the 21,300-22,200 range in January, and the sectoral Bank Nifty index to rule in the 47,500-49,500 range.
The latter closed at 48,292 on 29 December. “Seasonally, January tends to be a weak month for equities, with global fund managers taking some profits off the table," Taparia added. Indeed, in the past five years through 2023, January has given negative returns between 0.1% and 2.5%.
Gaurav Dua, senior vice-president and head of capital market strategy at Sharekhan by BNP Paribas, said he would not be surprised if the Nifty “pulled back by around 500 points, given December’s stellar rally". He expects the pullback in micro- and small-cap indices to be sharper if one indeed happens next month. However, his bullishness for the whole year is
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