Mumbai: Domestic institutional investors contributed Rs 98,400 crore worth of net investments in the cash market in October even as the stock market declined 7,5 per cent during the month owing to withdrawals by foreign portfolio investors, according to exchange data.
In comparison, DII’s Rs 4,63,984 since November 2023 in the secondary market. This marked Samvat 2080 as a record year for investments by DIIs.
What does DII activity show?
DII activity demonstrates a sense of optimism in Indian markets from domestic investors. They helped to avoid a major market crash in October despite a major selloff by FPI, the Indian Express reported, citing an analyst. DIIs that bridged the chasm left by FPI withdrawals included mutual fund houses and insurance companies, according to the report. Mutual fund SIP investors were major contributors with funds worth Rs 24,500 crore invested in September 2024.
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While small- and mid-cap funds garnered RS 3,070.84 crore and Rs 3,130.42 crore worth of funds in September, sectoral or thematic funds saw inflows slip to RS 13,254.63 crore in September compared with Rs 18,117.18 crore in the previous minth. Multicap fund inflows expanded to Rs 3,508.88 crore in September from Rs 2,475.06 crore in August.
Insurers are known to sell buy stocks when others sell. The Life Insurance Corp of India invested Rs 38,000 crore in June quarter 2024 and Rs 1,32,000 crore in FY24, according to the report.
Why are FPIs selling?
FPIs have been on a selling spree since early October owing to the lucrative valuations offered by Chinese stocks. In comparison with China, Indian stocks’ valuation is more expensive, leading to a major FII selloff, the Indian Express reported, citing Geojit Financial Services’ chief investment strategist V K Vijaykumar.
Escalated tensions in the Middle East region and uncertainty surrounding the US presidential election’s outcome have hurt market sentiment, which is expected to result in continued selling by FPIs, added Vijaykumar.
How stock markets performed in Samvat 2080
Samvat 2080 stock market performance in India was fuelled by strong corporate earnings and elevated GST collections among other factors. Mutual funds are contributed to market investment. Similarly, US indices jumped 27-35 per cent, during the same period, according to the report.
Despite strong fundamentals, India’s stock markets face a risk from geopolitical concerns and their potential impact on world trade as well as crude oil prices, according to OniScience’s CEO and chief investment strategist Vikas Gupta. A potential slowdown in the IS and Europe also poses risks for Indian exports, he added.
