While the stock market fell 7.5 percent in the last one month due to continued selling by foreign portfolio investors (FPI), domestic institutional investors (DII), led by insurance companies and mutual funds, They made a net investment of Rs 98.4 billion. According to exchange data, DIIs invested Rs 463,984 crore in the secondary cash market since November 1, 2023, making Samvat 2080 a record year for investment by domestic institutions.
DIIs were buyers throughout October and FPIs absorbed net sales of Rs 103.47 billion so far in October. However, FPIs were buyers in the primary market and bought shares worth Rs 17,145 crore during this period. A few major IPOs enabled this large investment in the primary market. The total FPI sales figure after primary market purchases during this period is Rs 83,097 crore.
“DII’s investments during October are a sign that domestic funds are optimistic about the stock market recovery. The market fell due to FPI selling. “Strong DII inflows prevented major losses in the market in October,” said one analyst.
Mutual funds are seeing good inflows into their capital schemes as investors remain committed to their systematic investment plans (SIPs) – they invested a record Rs 24,500 crore through SIPs in September. Insurance companies, especially LIC, which made profits of Rs 15,500 crore in the stock market in the June quarter, up 13.5 per cent from last year, are contrarian companies that buy when others sell and vice versa. The corporation, the largest institutional investor, had invested Rs 38,000 crore in the stock market in the June quarter and Rs 132,000 crore in the last financial year.
“The sustained FPI selling trend that began in early October continues and shows no signs of reversing any time soon. The current FPI sell-off was triggered by Chinese stimulus measures and cheap valuations of Chinese stocks. VK Vijayakumar, chief investment strategist at Geojit Financial Services, said high valuations in India have made India one of the best options for FIIs to sell.
Continuous FPI selling affected market sentiment and Nifty turned down from its high. “FPI sales are likely to continue in the near term as market sentiment remains weak due to rising tensions in the Middle East and uncertainty over the outcome of the US presidential election,” it said.
Inflows into small and midcap funds stood at Rs 3,070.84 crore and Rs 3,130.42 crore, respectively, in September. Multi-cap funds recorded inflows of Rs 3,508.88 crore compared to Rs 2,475.06 crore in the previous month.
“Sector and thematic funds remain popular, although inflows have decreased. There remains strong interest in mid-cap, small-cap, flex-cap and multi-cap funds, with multi-cap funds emerging as new favorites among investors. Large cap funds were the only category that saw relatively smaller inflows. This trend reflects the continued confidence of investors in various segments of the stock market,” said Pankaj Shrestha, Head of Investment Services, PL Capital – Prabhudas Lilladher.
Meanwhile, Indian stock markets saw a significant rally during Samvat 2080, with Nifty rising nearly 25 percent despite FPI withdrawals. The growth was driven by strong corporate earnings, better GST collections, better capex cycle, favorable monsoon conditions and higher domestic demand. Additionally, mutual fund liquidity flows and positive global signals contributed to market resilience. Globally, US indices also gained 27 to 35 percent during the period, reflecting a synchronized rally.
Vikas Gupta, CEO and chief investment strategist at Omniscience, said: “The main growth drivers for Indian stock markets include steady growth in corporate profits, which has boosted investor sentiment, and improving spending. of capital, particularly in infrastructure, in which development possibilities are increasing. .” Higher GST collections reflect strong consumption patterns and economic expansion, while a favorable monsoon has supported agricultural productivity and sustained rural demand. Additionally, India’s large domestic market continues to provide stability in the face of global uncertainties, and positive liquidity flows, particularly from mutual funds, have supported market momentum, it said.
However, some risks remain. Gupta said geopolitical concerns could disrupt global trade and investor sentiment, rising crude oil prices could raise inflation and affect the balance of trade, and a global economic slowdown, particularly in the United States and Europe, could affect Indian exports.
