Deciphering the FIIs and DIIs sector-wise investments in December 2023: Are you positioned in the right sector?

In stock market participation, Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) hold substantial significance. Their investing patterns wield considerable influence due to their substantial financial capabilities and robust analytical teams. Observing their movements can provide valuable insights, as their entry or exit within a particular sector often signals potential market shifts. For instance, their increased involvement in a sector may hint at forthcoming developments, warranting attention. Conversely, when FIIs turn into net sellers, it might indicate a pessimistic market outlook.

This article aims to delve into the buying and selling activities of FIIs and DIIs over the past three months, particularly spotlighting December 2023 which can be used to plan investment into a particular sector.

Sectors where FIIs/DIIs have turned net buyers after a two-month interval: 

The Financial Services sector has received significant attention from both FIIs and DIIs, with approximately Rs 29.16 crore in investments. Additionally, the Construction, Consumer Durables, and Power sectors collectively attracted over Rs 1000 crore from these investors. These sectors are worth keeping a close watch on.

Particularly, the Power sector has been in the spotlight for the past month, demonstrating impressive returns. The future outlook for renewable energy appears promising, with several upcoming projects anticipated to be announced soon.

Return-wise, the Nifty Financial Services Index recorded a gain of over 7% in December. Currently, it seems to be in a consolidation phase, awaiting a definitive upside breakout.

Interestingly, the Chemical Sector has attracted Rs 423 crore in investments. Despite this influx, many chemical stocks are currently trading below their 52-week highs or all-time highs, potentially presenting a value-oriented opportunity at their current prices. Investors should consider monitoring individual stocks within this sector, closely observing their price and volume movements for potential investment prospects.

Sectors where FIIs/DIIs have been net buyers for two consecutive months: 

Investors understand IT stocks exhibited remarkable returns following the post-COVID market decline. However, they have been underperforming and stuck in a prolonged consolidation phase. This situation has created a potential value-buying opportunity. Over the last two months, FIIs and DIIs have notably increased their investments in IT stocks, marking a more than 500% surge in their investments in December compared to November.

Additionally, investments in Auto and Auto Components stocks have escalated by 790% on a MoM basis. Moreover, the Healthcare and Metals & Mining sectors witnessed a substantial increase in investments by 146% and 138%, respectively compared to the November month.

Sectors where FIIs/DIIs have been net buyers for three consecutive months: 

Construction material companies should also be kept on your radar, given that they have attracted a substantial investment of Rs 3668 crore, representing a 360% increase in MoM. Additionally, the Telecommunications sector drew Rs 2411 crore in investments, marking a 191% increase compared to November. Finally, investments in the capital goods sector surged by 43% MoM in December.

Sectors in which FIIs/DIIs turned net sellers in the last month: 

These four sectors have experienced a decline in interest from FIIs and DIIs, turning them into net sellers. Specifically, the Media, Entertainment, and Publication sectors have seen a significant increase in selling activity, approximately 1.8 times more than the sales recorded in the previous month of November.

Conclusion: 

Monitoring the activities of FIIs and DIIs is crucial as they are key players in the stock market. Keeping tabs on their movements helps in devising an investment strategy and identifying sectors attracting significant capital inflows. Analyzing the data presented in the article enables an assessment of sectors with favourable risk-to-reward ratios. It also sheds light on sectors that have yet to exhibit strong performance but have the potential for future growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.