FIIs Back To Buying Mode In Indian Equities

Foreign Institutional Investors have re-entered their buying mode in the Indian Stock Market and are back to buying mode, making a positive shift in investor sentiment following the national elections that ended earlier this month. Over the past 3 days, FIIs have made significant purchases in Indian equities, signaling a renewed confidence in the country’s economic landscape. Before this, the FIIs continued to sell 

Selling Trend in the past few months

This buying stance came after a period of persistent selling by FIIs over the past 2-3 months. From April to the end of the elections in India, FIIs were net sellers in the Indian equity market. 

The FII Net Cash activity for the past two months of April and May stood at Rs.-35,692 crores and Rs.-42,214 crores respectively. The major reason for FIIs pulling off their stake in these months was the seven-phased Lok Sabha Elections going on at that time FIIs often pull off their stake during the election time as they prefer stability and during the election time there is uncertainty regarding various future policies and governance and also any change in leadership can unsettle the preferred stability. Also, Elections can create more volatility in the Indian Markets as investors react to opinion polls during that time so this may also hamper the risk perception of FIIs, so they try to reduce some of their stake until the political uncertainty stabilizes and there are other concerns like geopolitical uncertainties, fluctuating oil prices which contributed to the selling.

FIIs are back in Buying mode from the past 4 sessions

The FIIs have been net buyers from the past four sessions consecutively in the cash segment, The net cash activity for FIIs in these 4 sessions is worth more than Rs.12,000 crores.

The major reason behind the recent resurgence of buying tendency is the political stability brought about by the election results announced on June 4th, 2024. Stability was crucial for investors to provide a predictable political environment. 

Conclusion: Foreign Institutional Investors (FIIs) after being net sellers in April and May, have resumed their buying with a continuous buying trend observed over the past four days. However, the overall cash activity for the FIIs till now for the month of June is still Rs.-795 crores.

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.