On Friday, FIIs sold shares worth Rs 4,352.82 crore while domestic institutional investors (DIIs) were net buyers at Rs 7,646.49 crore.
FIIs were sellers seven times on a monthly basis in the financial year that ends on Monday, March 31, 205. The highest exodus happened in October and January when the FIIs sold shares worth Rs 94,017 crore and Rs 78,027 crore, respectively.
FIIs were net buyers in June, July, August, September and December with highest buying seen at Rs 57,724 crore in September.
Meanwhile, DIIs remained bullish on the Indian equities through the year, with not even a single month recording net selling activity by them. October and January months witnessed sharpest DII buying at Rs 1,07.255 crore and Rs 86,592 crore.
Commenting on the current trends, VK Vijayakumar, Chief Investment Strategist at Geojit Investments said that the change in FII strategy from sustained selling to modest buying was visible in the week that ended March 21 and it picked-up pace in the following week that finished this Friday.
FIIs turning net buyers over the last fortnight helped Nifty finish with nearly 6% gains in March. It was after five straight months of decline, the longest since Nifty’s launch in 1996.
Vijayakumar attributes three major reasons for the reversal. One is the valuations turned attractive after the Nifty plunged 16% from the September peak, till February. Another reason was the recent appreciation in rupee which led to reversal of the momentum trade towards US investment. Finally, India’s macros like GDP, IIP and CPI inflation improved, paving the way for a rally in the market, this analyst said.
Going forward, the trend in FII flows will depend mainly on Trump’s reciprocal tariffs expected on April 2nd. If the tariffs are not severe, the rally may continue.”
Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services at BDO India pointed out another big development, which he said is a sentiment booster. “One of the key announcements made by the Sebi in its Board meeting w.r.t the FPI community has encouraged the FPIs. Based on the reaction of a few large banks on restricting the P-Notes trading volume, the existing threshold for granular beneficial ownership disclosures was increased from Rs 25,000 crore to Rs 50,000 crore. FPIs having more than 50% of their portfolio in a single corporate group will continue to abide by the earlier limit. Hopefully, this will bring back the much-needed volume in trades and liquidity in the market,” he said.
Moreover, the Reserve Bank of India (RBI) is set to double to 10% a cap on investment by individual foreign investors in listed companies, as it aims to boost capital inflows, according to two senior government officials and documents reviewed by Reuters.
Read More: RBI set to double investment limit for foreign individuals: Sources & memo
(Data Inputs from Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
