“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.

Associated Article:

https://universalinstitutions.com/why-fiis-are-taking-flight/

https://universalinstitutions.com/investment-models/