Instead of being carried away by Friday's historic election verdict, savvy investors were seen taking money off the table, after the benchmark Sensex rallied about 1,500 points in intra-day trade.
Sources said several large foreign institutional investors (FIIs), as well as domestic insurers, were seen booking profits as the index breached the 25,000-mark after it was clear the Narendra Modi-led Bharatiya Janata Party (BJP) would get a decisive mandate.
On Friday, the Sensex closed at 24,121.7, up 216 points, or 0.90 per cent, while the National Stock Exchange (NSE)'s Nifty gained 79.85 points, or 1.12 per cent, to close at 7,203. In intra-day trade, the Sensex had soared 1,460 points to 25,376, while the Nifty had risen about 400 points to 7,558.
According to institutional brokers, large FIIs, including Morgan Stanley and Swiss Finance Corporation, booked profits in blue-chip companies such as Reliance Industries and ITC, after the market soared five per cent in afternoon trade on Friday.
Domestic institutional investors (DIIs), including HDFC Standard Life and SBI Life Insurance, were among the sellers.
Proprietary broking firms, which trade on their own account, were actively booking profits at every opportunity, said market players.
According to provisional figures, FIIs gross-sold shares worth about Rs 8,300 crore ($1.4 billion) on Friday, while DIIs gross-sold shares worth about Rs 3,700 crore. FIIs ended up buying shares worth Rs 3,635 crore on a net basis, as their gross purchase amounted to about Rs 12,000 crore.
Domestic institutions were net sellers by Rs 350 crore.
Several shares fell sharply from their day's highs, owing to heavy selling. Hero MotoCorp declined 16 per cent from its day's high of Rs 2,490 to end at Rs 2,398. Tata Steel, Cipla, Ultratech Cement and ICICI Bank also fell nearly 10 per cent each from their highs.
"A lot of investors were seen cutting positions, as they made excellent gains after a sharp run-up in stocks in just a few days. It doesn't necessarily mean they have turned bearish. We expect them to take fresh positions next week," said the head of institutional trading at a foreign brokerage.
On Friday, trading volumes were exceptionally high. The total cash market turnover stood at Rs 43,000 crore, the most since May 2009. On the derivatives side, too, the turnover was steep. The NSE clocked a turnover of Rs 4.37 lakh crore in the futures and options segment, while the BSE derivatives segment saw turnover of an additional Rs 7,749 crore.
Typically, while trading on the day of election results, investors cash is on sharp stock swings.
Rapid fall in Sensex raises eyebrows
The sharp drop in stock markets within minutes on Friday has caught the eye of the Securities and Exchange Board of India (Sebi).
At around 1:30 pm on Friday, the Sensex fell 560 points, while the Nifty fell about 150 points, within 10 minutes. Sources said Sebi’s surveillance department was analysing trade data for this period. “We are checking for any discrepancies and whether it makes for a formal probe,” said a regulatory source.