Domestic Institutional Investors (DIIs) have doubled inflows into Indian equity markets since US President Donald Trump started announcing significant tariffs on imports. Since July 30, the US has imposed a total of 50% tariffs on Indian goods.
DIIs step in as FPIs exit amid tariff shocks
Since the announcement, the average daily inflow of DIIs has risen 148% from the first 30 days of July at Rs 6,166.89 crore in the past seven sessions. The average daily inflow from July 1- July30 was Rs 2,480.29 crore and that of June was Rs 3,460.66 crore. The Sensex has fallen 2% since July 30 closing.
After Trump announced 25% tariffs on July 30, DIIs pitched in aggressively on the next day and bought shares of Rs 6,372.71 crore. On August 6, after he announced an additional 25% tariff – totalling 50% in all – DIIs have again stepped in the last two days with investment of Rs 18,587 crore. Some of this investment has also been driven by Antfin’s stake sale in Zomato on Thursday.
Meanwhile, foreign portfolio investors have net sold shares worth Rs 9,837.41 crore in August so far. However, on Friday, they turned net buyers of Rs 1,932.81 crore due to large deals in Bharti Airtel.
Markets volatile; SIP flows may be key stabiliser
Swarup Mohanty, CEO of Mirae Asset Mutual Fund sees DII inflows only rising from here onwards. “There is a lot of money to be put in thanks to the SIP money and we are very lucky to be sitting there,” he said.
On Friday, the Nifty 50 and Sensex closed nearly 1% lower at 24,363.30 points and 79,857.79 points respectively.
Vinit Bolinjkar, head of research at Ventura Securities, said if the situation does not improve DII buying will slow down as people may start becoming more circumspect about continuing their SIPs. He sees the Nifty falling to 24,100 mark very quickly, as it is hitting new lows every day and said investors should use this opportunity to consolidate.
Sudip Bandyopadhyay, group chairman of IndiTrade Capital said the US is the largest market and it will be difficult if the access becomes difficult. “We are already seeing FPI exodus, we can only hope that DII flows sustain,” he said and added that volatility will continue and investors should focus on domestic sectors.