For the past month, market has been range bound. It was said that this was due to uncertainty in Greece and China. Last week, there was positive news on both these fronts and so it goes that the markets responded positively. In last week alone, Nifty rose 250+ points.

Financial Media is drumming the markets to go higher. It is widely accepted (at the time of this writing) that NIFTY should hit 8800 soon.

Economic Times: Expect Nifty to head towards 8780-8800

I came across the Derivatives Thematic Report from ICICI for 15th July, 2015. (Link) Although positive in theme, this document has spooked me.

Two points especially caught my attention

Mutual funds are on a buying spree in 2015. In the quarter ended June 30, 2015; the MF AUM crossed the Rs. 12 trillion mark as they bought over Rs.396 billion during this quarter.This was their seventh consecutive quarter of buying (as reported by Amfi). The buying during this quarter is more significant because despite FII outflows and a weak Q4FY15, mutual funds pumped in record amounts.

and

In the last three months, when MFs poured in US$3.5 billion, FIIs withdrew US$2.7 billion (ex- Sun Pharma deal).Going ahead, we believe this trend is likely to continue as the global volatility across asset classes is on the rise. This is likely to create headwinds for secular FII inflows into EMs

also..

Of the total DII inflows in 2015 of Rs. 27,500 crore, MFs have bought Rs.30,000 crore while insurance companies have sold Rs.2,500 crore.

In the Indian Market context, I consider

DII – Insurance Etc. = Smartest Money

FII = Smart Money

DII – Mututal Funds = Dumb Money

Therefore, my take is that smart money is out of the Indian Equity market and propaganda is underway to encourage dumb money to buy.