Retail investors rise, FII dominance fades: comeback ?

In the stock market, foreign institutional investors (FIIs) have been consistently selling. FIIs have remained net sellers in the Indian market, but despite this, the market hasn’t declined because retail investors have absorbed all of the FII selling. The outflow of FII funds has been due to China’s cheaper markets. Foreign institutional investors have been busy profiting from the Buy China, sell India trade, withdrawing their funds from Indian markets. However, their position as the largest investors in the market is now unstable. FIIs may lose their status as the biggest investors on Dalal Street. During the period of FII selling, DIIs also continuously increased their position. In the September quarter, the share of domestic institutional investors in NSE listed companies rose from 16.25% to an all time high of 16.46%. This quarter saw a net inflow of ₹103,625 crore. FIIs also engaged in significant selling, with a net outflow of ₹94,017 crore (₹1,13,859 crore outflow in the secondary market and ₹19,842 crore in the primary market). In October, with a net inflow of ₹1,07,255 crore by DIIs, the DII share has now surpassed the FII share. So far in November, FII have made ₹15,000 crore sales on Dalal Street, as reversing fund flows is becoming difficult due to the second quarter earnings season and high valuations. Experts believe that for many years, FIIs have been the largest non- promoter shareholders in the Indian market, with their investment decisions significantly impacting the markets overall direction. Retail investors, high net worth individuals and DII are now playing a strong counter-balancing role, with their share reaching an all time high of 26.04% in the second quarter. The share of retail investors and HNI investors, dropping from 7.64% and 1.98% at the end of June.