The Indian share market has defied odds over the past year, maintaining a strong positive trajectory despite global challenges. Benchmark indices, the Sensex and Nifty 50, have surged more than 6% gains in the past one year.
According to the market experts, the key factors contributing to this success is the effective management of macroeconomic, including inflation, coupled with corporate earnings that exceeded expectations even in the face of adversity. This combination of prudent fiscal management and corporate performance has buoyed investor confidence.
India has managed to secure a disproportionately large share of Foreign Portfolio Investment (FPI) funds within the realm of emerging markets. The benchmark indices, BSE Sensex and NSE Nifty 50, have witnessed gains exceeding 6%, despite significant sell-offs by Foreign Institutional Investors (FIIs) over the past year.
In October 2022, Foreign Portfolio Investors (FPIs) divested shares worth Rs. 489.06 crores. In contrast, Domestic Institutional Investors (DIIs) took a different path, with DIIs purchasing shares worth Rs. 9,276.97 crores in the same month. However, the situation shifted in November 2022 when FPIs entered the market as net buyers, investing Rs. 22,546 crores, while DIIs sold shares amounting to Rs. 6,301.32 crores.
The data further says that from December 2022 to February 2023, a trend reversal emerged as FPIs sold shares worth Rs. 66,785 crores, while DIIs bought shares worth Rs. 76,809 crores during the same period. This pattern shifted again from March 2023 to July 2023, with FPIs becoming net buyers, purchasing shares worth Rs. 76,736 crores, as per data available on the NSDL website.
In the last three months, FPIs have been consistently selling, with divestments totaling Rs. 76,368 crores. The data highlights that FPIs sold shares amounting to Rs. 44,352 thousand crore over the past year. In contrast, Domestic Institutional Investors (DIIs) played a pivotal role by remaining net buyers throughout this period, making equity purchases totaling Rs. 1,93,740 crore.
DIIs’ substantial investment was supported by consistent inflows into Mutual Funds (MFs), even as the rate of monthly inflows exhibited a marginal decline. This indicates a strong domestic appetite for equities, driven by factors such as long-term financial planning and savings.
This marks the second occasion when FIIs flows have turned negative. Since the inception of 2022, FIIs consistently remained net sellers, a trend that persisted until November of the current calendar year. However, they reverted to being net sellers in September and October, displaying a degree of volatility.