FIIs sold ₹7,630 crore so far in Nov, snap selling streak on 15th day, DIIs infused ₹9,093 crore; What lies ahead? | Mint
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Business News/ Markets / Stock Markets/  FIIs sold 7,630 crore so far in Nov, snap selling streak on 15th day, DIIs infused 9,093 crore; What lies ahead?
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FIIs sold ₹7,630 crore so far in Nov, snap selling streak on 15th day, DIIs infused ₹9,093 crore; What lies ahead?

Foreign inflow continues to be muted over concerns of an elevated interest rate and a global slowdown, however, the outflow in November has significantly moderated over lower US bond yields and declining crude oil prices.

FIIs have been net sellers in Indian equities since October. Photo: ReutersPremium
FIIs have been net sellers in Indian equities since October. Photo: Reuters

Foreign institutional investors (FIIs) snapped their selling streak on Wednesday, November 15, after US consumer price index (CPI)-based inflation eased in October, leading to a significant decline in US 10-year bond yields. 

However, the total foreign capital outflow stands at 7,630 crore in the first fortnight of November. The domestic institutional investors (DIIs) won the tug of war and remained net buyers in the first 15 days of the month.

As per the NSE data, FIIs cumulatively bought 15,620.95 crore of Indian equities, while they sold 15,070.76 crore --- resulting in an inflow of 550.19 crore on Wednesday. Meanwhile, DIIs invested 8,165.17 crore and offloaded 7,555.35 crore, registering an inflow of 609.82 crore.

Also Read: Technical Picks: Hindustan Copper, IRFC, 8 others among top picks by Prabhudas Lilladher; do you own?

FIIs have sold Indian equities since October on record-high US bond yields, strength of the dollar index, and the geopolitical risks due to the Israel-Hamas war. These combined factors have since weighed on market sentiment.

Foreign inflow continues to be muted over concerns of an elevated interest rate and a global slowdown, however, the outflow in November has significantly moderated over lower US bond yields and declining crude oil prices.

Selling streak to reverse, FIIs may turn buyers

Analysts reckon that the Indian market continues to exhibit resilience even in the midst of several challenges and there is a growing concern among foreign investors that if they continue to sell, they will miss out on the potential rally in the Indian market. This might restrain the FIIs from selling heavily in the coming days.

‘’FIIs are likely to turn buyers, lest they miss out on the rally in the best performing large economy in the world. Leading financials which were weighed down by FII selling will bounce back. Decline in CPI inflation in India is also a favourable factor,'' said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

‘’Across sectors, a rally is likely. Financials, automobiles, real estate ,cement and platform digital companies will attract investment from DIIs, HNIs and retail investors. The tug of war between FIIs and DIIs is clearly in favour of DIIs,'' added Dr. V K Vijayakumar.

Experts also project short covering by FIIs in the near-term as they turn buyers over positive global cues. With Brent crude crashing to below $85 per barrel-mark and the pause in rate hike by the Fed, foreign investors may start buying Indian equities soon, said analysts. This could lead to short covering which can take markets higher despite the uncertainty surrounding the Israel-Hamas conflict.

Stock Market Today

Domestic equity benchmark indices end in green on Wednesday's session amid positive global cues, and after lower US inflation data increased expectations of an end to the rate-hiking cycle in the largest economy in the world.

The US 10-treasury notes fell 15 basis points to 4.5 per cent indicating lowest in seven weeks, according to Trading Economics data. According to analysts, softening of US core macro economic data would lead to pressure in bond yields and eventually we would see lower selling pressure from FIIs in the domestic markets. 

Also Read: RBI likely to maintain hawkish stance, keep rates unchanged in near-term as core inflation eases to 43-month low

The 30-share BSE Sensex ended higher by 742.06 points or 1.14 per cent at 65,675.93 level while the Nifty 50 closed at 19,675.45 level, up 231.90 points or 1.19 per cent. The broader market was at par with the benchmark indices, the Nifty Midcap 100 closed 0.91 per cent higher and Nifty Smallcap ended 1.27 per cent higher.

"The market's strong gap-up jump in response to positive global cues on account of the softer than anticipated US and UK's inflation data, highlights the optimism for an end to the interest rate cycle, as evidenced by the ease in bond yields,'' said Vinod Nair, Head of Research at Geojit Financial Services.

‘’This is likely to draw FII flows into emerging markets, which is good for India considering the current better earnings season and the festive demand pick-up. The drop in the CPI for India also improved the mood. The rebound was broad based with IT, realty, oil & gas, metal, and auto leading the way,'' added Nair.

Where are markets headed?

Nifty has decisively crossed the trend line hurdle and looks set to test 19,850 now, according to analysts. ‘’Interestingly, noticeable contributions from heavyweights like Reliance, Infosys and TCS, which were on the sidelines, largely fuelled the up move. And, we expect their participation to continue thus reiterating our view to maintain a “buy on dips" approach and focus on stock selection,'' said Ajit Mishra, SVP - Technical Research, Religare Broking Ltd.

‘’Rally was seen in global markets..News of fresh stimulus in China and sharp fall in UK’s inflation boosted the sentiments. We expect market to maintain its momentum, driven by positive domestic data, cooling off US bond yields and dollar index,'' said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 15 Nov 2023, 09:49 PM IST
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