FII vs DII in Indian Equity Market

It’s been a tough couple of months for the Indian Equity market as form its all-time high, the Nifty50 has corrected 11% as on November 21st, 2024. Multiple factors can be a reason to this correction like escalating global tensions, US elections, depreciating rupee, etc, but the severe FII selling has been one of the major reasons. In the 35-day trading sessions since September 27th 2024, FII’s have been net sellers in the domestic markets but in the same time DII’s have been net buyers of the equities every single day.

The question now arises why this shift?

The increase in net buying by DII can be attributed to factors mainly Increased financial literacy, increasing retail participation through mutual funds, technological advancements, stable economic growth and favourable political landscape.

FII’s, on the other hand, have sold INR 60,859 Crores worth of Indian stocks till January 22, 2025. This amount is being reinvested in the US market due to following reasons – Higher US investment interest rates, developed economy with attractive investment opportunities, economic slowdowns and geopolitical tensions, analysts believe that Indian stocks are overvalued, earnings slowdown in India and depreciating rupee along with tariff fears.