Amid continued FII outflows, domestic institutional investors (DIIs) have also maintained their optimistic stance. According to experts, the general impression is that the market has weakened due to sustained selling by FIIs over the last three months.
“However, what is not generally appreciated is that even while selling in the cash market through exchanges, FIIs have been buyers through the primary market. They are major investors through the Qualified Institutional Placement (QIP) route. have been,” said Dr VK Vijaykumar, Chief Investment Strategist, Geojit Financial Services.
For the month of December, FIIs sold equity worth Rs 2,590 crore through the exchanges, but they bought equity worth Rs 18,036 crore through the ‘primary market and others’ category.
In 2024, FIIs sold equity worth Rs 121,210 crore but they bought equity worth Rs 121,637 crore through the primary market. Hence, FIIs have net bought Rs 427 crore in 2024.
“FIIs are likely to continue selling going forward, as long as the dollar continues to rally and US bonds fetch attractive returns. The dollar index at around 109 and the 10-year bond yield at over 4.5 per cent have fueled FII flows. “There are strong headwinds,” Kumar explained.
Despite stock market volatility amid geopolitical uncertainty, FIIs remained net investors in the country, as the country’s economy showed tremendous resilience. According to Manoj Purohit, Partner and Leader, Financial Services Tax, Tax and Regulatory Services, BDO India, the return of foreign participants to the Indian market can be attributed to various factors.
Basically, on the macro front, recent policy announcements in the US that affect neighboring countries, settling the geopolitical situation among countries in the Middle East, controlling inflation and checking interest rates are some of the factors, he said. .