DIIs on selling spree after 3 months. Will the trend reverse soon?

After three months, foreign portfolio investors and domestic institutional investors are at crossroads in November again, as the former has flushed the Indian market with billions of dollars, while the latter has chosen to take profits back home.

DIIs have turned net sellers of Indian equities to the tune of Rs 1,501 crore in November, according to Ace Equity, whereas FPIs have bought stocks worth Rs 29,200 crore.

This strong buying by FPIs helped the Sensex and Nifty 50 clock 4% gains and scale a lifetime high last month. Nifty50 and Sensex scaled lifetime highs of 18816.05 points and 63303.01 points, respectively.


While DIIs sold equities last month, in value terms it was far lesser than what they did in August.

In August, DIIs sold shares to the tune of more than Rs 7,000 crore, while FPIs pumped in Rs 55,300 crore and helped indices clock over 3% gains for the month.


Even though DIIs turned sellers last month, they remain a strong driving force for Indian equities, with their all-time high investment of Rs 1.76 lakh crore on a YTD basis.

In 2022 so far, DIIs have been net sellers of shares in only 2 months.

Market experts don’t see any major hiccups to the flows from this investor community given the sustained inflows that mutual funds are witnessing in equity through systematic investment plans or SIPs.

Historical data shows that DIIs have been net buyers of equities in December in 7 out of the last 10 years.

“We believe we have only scratched the surface. We are nowhere in terms of MF penetration when compared with global averages,” Amit Nadekar, senior equity fund manager at LIC Mutual Fund told ETMarkets.

Even though there could be bouts of profit booking seen in the near term given that markets are at record highs, experts see ample opportunities for DIIs to stay invested in the risk asset class.

“The flavour in equities continues to remain attractive given that markets are also at their highs and there will always be pockets wherein stocks will be attractive for long term wealth creation,” said Nirali Bhansali, equity fund manager at Samco AMC.

With DIIs, FIIs may also go hand in hand, given that India has been the best performing market in the emerging markets space, and some stability is emerging in global market conditions.

“Given how deep the selling by FPIs has been, FPI buying will return to India,” Morgan Stanley said in its report.

(Data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)