FII selling on Friday was to the tune of Rs 439 crore while the domestic institutional investors (DIIs) were net buyers at Rs 4,189 crore.
While FIIs have not budged from their selling stance, VK Vijayakumar, Chief Investment Strategist at Geojit Investments said that their sell-off has been completely eclipsed by the sustained strong buying by DIIs who bought equity for Rs 19,783 crores during this period.
“FIIs are selling now primarily because of the sharp depreciation of the rupee this year by around 5%. It is normal for FIIs to sell and take the money out during times of currency depreciation. On the other hand, DIIs have been investing systematically assisted by continuous fund flows, and recently they have been buoyed up by the robust GDP growth numbers and expectations of uptick in corporate earnings, going forward,” he said.
Foreign portfolio flows continued their familiar pattern in December, with overseas investors extending their selling streak — though the pace of outflows has eased from November’s Rs 3,765 crore. This followed a strong inflow of Rs 14,610 crore in October.
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In the third quarter of CY25, FIIs offloaded shares worth Rs 76,619 crore, reversing the buying seen in the April–June period when inflows totalled Rs 38,673 crore. The year had opened on a sharply negative note, with foreign investors pulling out a massive Rs 1,16,574 crore during the January–March quarter.
Vijayakumar sees the selling trends to continue at higher levels as the valuations are still perceived to be on a higher side. “In this tug of war between FIIs and DIIs, there will be days of sharp movements in the markets, in response to news and events. For instance, if there is a fair trade deal between India and the US, that can buoy up the sentiments in both equity and currency markets,” he added.
Vijayakumar said that the 25 bps rate cut by the Reserve Bank of India (RBI) on Friday and the proposed huge liquidity infusion have further improved sentiments in favour of the bulls.
“The decision to give further monetary stimulus to the economy even when the economy is firing on all cylinders reflects a courageous pro-growth central bank. With pro-growth fiscal and monetary policies, growth regaining momentum and indications of accelerating earnings growth, DIIs will continue to buy.
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