"FPIS SELL, DIIS BUY: IMPACT ON INDIAN STOCK MARKET"

Why in the news?

Market dynamics analyzed as FPIs sell and DIIs buy, influencing Indian stock market sentiment amid geopolitical uncertainties and election outcomes.
Foreign Portfolio Investors (FPIs) engaged in extensive selling in the lead-up to elections, totaling Rs 75,000 crore.
Conversely, Domestic Institutional Investors (DIIs), including mutual funds and insurance companies, purchased stocks worth Rs 300,000 crore during the same period.

Key points:Stocks

Stocks, shares, or equities represent ownership in a company.
Ownership grants a claim on the company’s assets and earnings.
Companies issue stocks to raise capital for growth or debt repayment.
Investors buying stocks provide funds to the company.
Some companies pay dividends, a portion of earnings distributed per share to shareholders.

source:slideshare

Understanding Foreign Portfolio Investment (FPI):

Involves purchasing various foreign financial assets by investors from outside their home country.
Instruments include stocks, bonds, mutual funds, derivatives, fixed deposits, etc.
Aims to generate quick returns by investing in foreign stock markets.

Regulation in India:

Regulated by the Securities and Exchange Board of India (SEBI).
Includes foreign institutional investors (FIIs) and qualified foreign investors (QFIs).

Advantages:

Provides investors with the opportunity to diversify their portfolios globally.
Allows investors to benefit from exchange rate disparities, potentially leading to substantial profits.

About Domestic Institutional Investors (DIIs):

Invest in securities and financial assets within their own country.
Include banks, insurance companies, mutual funds, etc.
Influenced by domestic economic and political trends.
Significantly impact stock market operations, especially when FIIs are net sellers.

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