Have you ever wondered how the big players in the market build their position in the stock without anyone noticing till the stock actually runs? Over the years, I’ve spent watching institutional traders at work, and there have been some common aberrations which you can watch for when we have a heads up on a major move. Here is what I have picked up on spotting these silent accumulators.
The first thing you’ll notice is unusual volume - in a way that will make you think twice before you draw the conclusion. Instead, search for above-average volume, if not steady, but with the price hardly moving. Institutional buying 101: They are not yet ready to push prices up by pushing them too much. Smart, right?
Here’s something interesting: institutional investors are at a 25-year high in equity, about 20% more than the normal 60 - 40 stock bond split. This market clearly offers them opportunities.
With your app or trading platform, you would want to spot their footprints while it happens. Watch the order book. You’ll find clusters of large buy orders at certain price levels. As big institutional positions are split thinly, aka ‘iceberg orders’, they are called.
There is also price action to tell of. Institutional accumulation in action is when you see a stock that’s holding sideways for weeks, with the closing price not moving. Recent data shows that 61% of institutional investors’ holdings are kept longer than four years, up from 55% in 2023.
Next, always watch the Relative Strength (RS) line. Normally, something interesting happens when the stock moves sideways, and the stock is making new highs. However, there’s still plenty of accumulation going on right now, as 73% of institutional investors feel bullish about 2025 (compared with 60% last year).
Remember the Sensex’s 8% gain in 2024? These exact patterns were the beginning of many of those moves. Knowing these signs could put you in a position to seriously gain an edge, with 30% of institutions planning to increase their position in the next 12 months. When you are analyzing the stocks, keep the patterns I have discussed earlier in your mind. You are just in time to spot the next institutional play before many other traders!