Instos eye banks: MPW

Macquarie reckons domestic institutional investors will move back into the big banks given the current economic environment, putting positive pressure on their share prices.

Macquarie Private Wealth sees further upside to the big banks' share prices as domestic institutional investors rotate back in the search for yield and growth.

The broker tips the biggest upswings to come from Australia and New Zealand Banking Group (ANZ), National Australia Bank (NAB) and Westpac Banking Corporation (WBC) because they have seen a higher percentage of domestic shareholders exit over the past 12 months, leaving more space for when they move back in.

Historically, bank share prices weaken when retail investors increase their exposure and grow stronger when institutional investors do the same.

And with cash rates remaining low and Australian dollar continuing to soften, institutional investors don't have many other options.