Since the US Fed cut on September 18, which saw foreign institutional investors (FIIs) pumping in nearly $5 billion into the secondary markets, high net-worth individuals sold a net $1.04 billion (Rs 4,179 crore) worth of stocks, according to data available from the Bombay Stock Exchange (BSE).

Alex Mathews of Geojit Financial Services [Get Quote] said investors had been advised to sell 25 per cent of their holdings following the sharp rise in stock prices in the last two weeks. "It is always advisable to book profits when prices are rising sharply," he said.

During this year so far, rich investors have been net sellers of stocks worth Rs 12,337 crore as a protection against a sharp fall in stock prices.

In the current rally, rich investors are hoping to cash in on the surge in prices, having failed to cut losses during the two big downswings in prices.

"Most high-net worth individuals want to recover at least the basic amount of money they had put in to buy the stocks," said Ajay Pandey, assistant vice-president of Systematix Shares & Stocks.

He added that "fear and ignorance" were forcing them to book profits in the recent run-up in prices.

In February, stock prices fell 13 to 15 per cent owing to the unwinding of the yen carry trade as investors, who had borrowed in the Japanese currency to buy stocks, booked profits when the yen strengthened against the dollar.

In August, prices fell by a similar amount as investors sold in emerging markets to make good losses in the sub-prime (or high risk) mortgage markets in the US.

Since the US Fed rate cut, however, the bellwether BSE Sensex shot up by about 15 per cent.

Pandey said most of the profit-booking was seen in mid- and small-cap stocks since investments in most large-cap companies were done on a long-term basis.

Domestic institutional investors have also been net sellers of over Rs 2,100 crore (Rs 21 billion) this month, but were net buyers of Rs 10,252 crore (Rs 102.52 billion) between April and October 5.

Analysts anticipate a sharp correction in the market, given it has risen non-stop from a low of 13,870 on August 22 this year - a rise of nearly 4,000 points in just over a month.

Arun Kajriwal, director of KRIS Capital, said: "We are advising clients to book profits because there seems to be a lot of uncertainty before the Infosys [Get Quote] results (on October 11) and no one is in a position to even make a wild speculation about the outcome. We are also looking forward to what the Reserve Bank of India [Get Quote] will decide on the interest rate scenario."