DII stock purchases of Rs 57,792 crore countered FPI sales of Rs 58,394 crore so far in October.
The Corporation, the biggest institutional investor, made stock market investments of Rs 132,000 crore in the previous fiscal year and Rs 38,000 crore in the June quarter.
The enormous sales by foreign portfolio investors were absorbed by domestic institutional investors (DIIs), spearheaded by mutual funds and LIC, averting a significant market meltdown that had been imminent since the start of the month. Between October 1 and October 11, DIIs bought equities valued at Rs 57,792 crore, while FPIs sold stocks valued at Rs 58,394 crore during same time.
According to stock market statistics, DIIs bought equities worth Rs 13,245 crore on October 7 and Rs 12,913 crore on October 3.
However, on October 3, FPIs sold equities valued at Rs 15,243 crore.
The steady stream of money flowing into equity plans has helped DIIs absorb FPI-caused sales. According to AMFI statistics, inflows into equity mutual funds were Rs 34,419.26 crore in September as opposed to Rs 38,239.16 crore in the same month the previous year.
Systematic investment plan (SIP) contributions reached a record high of Rs. 24,508.73 crore in September 2024, up from Rs. 23,547.34 crore in August. According to one expert, “many funds, especially LIC, are contrarians as they buy when other investors sell stocks.”
In the June quarter, LIC profited from the stock market to the tune of Rs 15,500 crore, up 13.5% over the previous year.
The Corporation, the biggest institutional investor, made stock market investments of Rs 132,000 crore in the previous fiscal year and Rs 38,000 crore in the June quarter.
Since the Chinese government announced monetary and fiscal measures to boost the flagging Chinese economy, foreign portfolio investors (FPIs) have been adopting the “Sell India, Buy China” approach. “FPI capital has been shifting to inexpensive Chinese equities lately. Nifty is currently trading at a PE of 23 times anticipated FY25 profits, whereas the Hang Seng index (which includes Chinese H companies traded in Hong Kong) is currently trading at a PE of about 12. Thus, additional capital may flow into Chinese equities.
However, India currently has far higher development potential than China, and as such, India is worth premium values. However, the current valuation gap is too great, which may prolong the FPI selling for a while, according to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Since all of the FPI selling was taken up by DIIs, who are continuously getting money inflows, the enormous FPI selling had no discernible effect on the market. In the near future, this pattern of FPI selling and DII purchasing is probably going to continue, he said.
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