Foreign institutional investors, often known as FIIs, have been purchasing Indian stocks as if there is no tomorrow, despite the fact that the US Federal Reserve raised interest rates by 75 basis points earlier this month and that valuations on Dalal Street are not particularly low. In each of the past ten trading sessions, FIIs have been net purchasers, and over three billion dollars worth of equity has been accumulated as a result of their activity during this time period.
According to the data provided by NSDL, the amount of net investment made by FIIs from October 21 totals Rs 24,899.59 crore, which is greater than $3 billion. The highest buying was seen two days ahead of the outcome of the US Fed meeting on November 2 and continued non-stop even after Powell’s hawkish comments signaled that interest rates will rise higher than previously expected.
Dalal Street is where both FII and DII flow.
During this time period, domestic institutional investors, sometimes known as DIIs, have been quite busy booking profits, which is an interesting development. During the past 10 trading sessions, DIIs have only had one instance in which they were net purchasers, and they have collectively sold equities with a value of Rs 6,779.93 crore.
In the calendar year, 2022, only the months of July (with a net purchase of Rs 4,989 crore) and August have seen FIIs act as net purchasers (Rs 51,204 crore). Since the beginning of the year, a total of more than Rs 151,900 crore has been generated via sales.
So, why are foreign institutional investors purchasing such massive amounts of Indian stock? Here are the three primary reasons:
Dalal Street has been a haven of calm in the midst of the chaos that has been observed in global markets throughout the year 2022. This has been made possible by the substantial domestic flows that have been supporting the market. While the Dow Jones has lost more than 9% of its value so far this calendar year, the Nifty has gained more than 5% and is on the verge of reaching an all-time high.
“Even though interest rates have been going up, the Indian market has been defiant and has refused to go down. This is giving global investors a severe case of FOMO (fear of missing out). The fear of missing out (FOMO) element will intensify after the Nifty reaches its all-time high “the founder of RISCH Wealth and Family Office, Rishiraj Maheshwari, was quoted as saying.
The quarterly earnings season is showcasing the inherent resilience of the Indian economy despite the fact that there have been a number of hits and misses. This comes amid predictions of a worldwide recession. The data for the second quarter of the year for banks have been positive while the results for IT have been on expected lines with respectable growth. This has been helped by strong credit growth, increasing asset quality, and rising margins.
“As long as India’s growth story remains unchanged, you can anticipate a satisfactory flow moving forward. When compared to other emerging markets, India’s positives include earnings that are better than expected and macroeconomic data that are comfortable “K Dileep, who serves as the Head of PMS at Geojit Financial Services NSE 0.22%, made this statement.
3. Stronger rupee
The strength of the Indian rupee is increasing alongside the weakening of the US dollar index, which has dropped from its peak near the level of 115 to a range below 110. After falling to a record low of 83.32 against the American currency the previous month, the value of the local currency reached a one-month high of 81.39 against the American currency today.
The previous currency depreciation was blamed for a significant portion of the FII exodus that occurred. “The fall of the dollar index below 110 will encourage foreign institutional investors to purchase more. After the Nifty reaches the all-time high of 18,604, there is a good chance that it would see a large decline “Dr. V. K. Vijayakumar, who works for Geojit Financial Services, made this statement.
Observers of the foreign exchange market anticipate that the rupee would trade with a positive bias on the back of an increase in risk appetite on global markets and a decline in the value of the dollar.
For More Stocks And Investment Related News, Click Here.