Foreign institutional investors (FII) sold shares worth a net Rs 5439.64 crore while domestic institutional investors (DII) bought shares worth a net Rs 4506.31 crore on Tuesday, January 31, 2023, according to the data available on NSE. In the month of January, FIIs sold shares worth a net of Rs 41,464.73 crore while DIIs purchased equities worth a net of Rs 33,411.85 crore.
Foreign institutional investors (FII) or Foreign portfolio investors (FPI) are those who invest in the financial assets of a country while not being part of it. On the other hand, domestic institutional investors (DII), as the name suggests, invest in the country they’re living in. Political and economic trends impact the investment decisions of both FIIs and DIIs. Additionally, both types of investors — foreign institutional investors (FIIs) and domestic institutional investors (DIIs) — can impact the economy’s net investment flows.
“The massive FPI selling in Indian markets has impacted market sentiments. NSDL data shows FPI selling of Rs 28852 crores in January. The actual selling in the cash market is a mammoth Rs 53887 crores in January. FPIs are selling in India and buying in cheaper markets like China, Hong Kong and South Korea where valuations are attractive. This “short India and long other cheaper markets” strategy has led to big underperformance of the Indian market, so far this year. While China, Hong Kong and South Korea are up by 5.4 %, 10.4% and 8.4% respectively in January India is down by 2.4%. This kind of underperformance is unlikely to last long. FIIs are also hugely short in the derivatives market. If the budget turns out to be good, with no unpleasant surprises, there can be short covering leading to a spurt in the market. On the other hand, if there is some negative proposal like hiking the LTCGs tax to 20%, FIIs will continue to sell, pushing the markets further down. The Economic Survey reflects optimism on the growth and corporate earnings front. This augurs well for the markets in the medium term,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.