FIIs pump over ₹9,000 crore in Indian equities this week, DIIs net sellers in 3 sessions: What’s behind this trend?


The return of FIIs, along with the monetary policy announcement of the Reserve Bank of India (RBI) were among key factors which drove the benchmark Nifty 50 to hit its fresh record high of 21,006.10 in the intraday session on Friday, December 8. The domestic institutional investors (DIIs) also infused in Indian stocks – with a total of 4326.47 crore this week, however, FIIs have now won the tug of war with greater buying.

As per the NSE data, FIIs cumulatively bought 19,329.28 crore of Indian equities, while they sold 15,696.98 crore — resulting in an inflow of 3,632.30 crore on Friday. Meanwhile, DIIs invested 9,533.13 crore and offloaded 9,967.15 crore, registering an outflow of 434.02 crore.

“Even though the undertone is bullish, the market is likely to consolidate in the near-term since up moves will be countered with profit booking by DIIs and individual investors who are sitting on big profits,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

‘’Dips will be bought by FIIs who have emerged as sustained buyers. The continuous decline in US bond yields ( the 10-year yield is now below 4.20 per cent) will ensure FII buying,” added Dr. V K Vijayakumar.

What’s driving the rally in Indian markets?

The Indian economy grew 7.6 per cent during the July-September quarter for fiscal 2023-24 (Q2FY24), remaining the fastest-growing major economy in the world, according to the gross domestic product (GDP) data released by the statistics ministry.

Also, the BJP winning by a majority of votes in the the hindi heartland – Madhya Pradesh, Rajasthan, and Chhattisgarh in the state assembly elections on December 13, instilled a sense of political stability ahead of General Elections 2024. Market analysts say that a stable political environment could boost investor confidence and drive the market higher.

“The landslide victory of BJP in elections in three states spurred a rally with an anticipation that the country will witness a stable government post the General election. All the sectors have broadly participated in the rally with an optimism that the FIIs will continue its value buying, indicating positive commentary on the global inflation data and stable domestic macro economics,” said Vinod Nair, Head of Research at Geojit Financial Services.

Also Read: Nifty 50 settles near 21,000 as RBI raises growth forecast; bank, IT stocks shine

Frontline indices Sensex and Nifty 50 ended in positive territory on Friday, December 8, on gains led by banking and IT stocks, including HDFC Bank, Infosys and ICICI Bank, after the RBI kept the repo rate unchanged and raised the GDP growth forecast for the financial year 2024.

Following the policy announcement, the Nifty 50 breached the 21,000 mark for the first time and hit its all-time high of 21,006.10 during the session. The Sensex also hit its fresh record high of 69,893.8 during the session.

Nifty 50 closed at 20,969.40, up 68 points, or 0.33 per cent while the Sensex closed the day at 69,825.60, up 304 points, or 0.44 per cent. For the week, both the Nifty 50 and the Sensex jumped 3.5 per cent each while the BSE Midcap and Smallcap indices rose 2 per cent and 1.3 per cent respectively.

“Post-state elections, market optimism thrives, confirming policy continuity and meeting investor expectations. A robust FII reversal is fuelled by receding inflation and dropping yields in both US and Indian markets. The allure of Indian market gains post-China credit rating downgrade,” added Nair.

Besides, the RBI raised its real GDP growth projection for FY24 to 7 per cent from 6.5 per cent earlier. However, the central bank kept the inflation forecast unchanged as it projected consumer Price Index (CPI)-based inflation, or retail inflation, at 5.4 per cent for FY24.

While the central bank is positive about the country’s strong growth prospects going ahead, it remains wary of inflation and indicates that a higher interest rate regime may not reverse in a hurry, which triggered a sharp volatility in intra-day trades, according to analysts.

Also Read: After RBI MPC verdict today, US Fed to unveil policy decision next week: Here’s what experts predict

Technical View

Ajit Mishra, SVP – Technical Research, Religare Broking Ltd said, ‘’Markets remained in a range for most of the session and ended with marginal gains. Nifty tested a new milestone of the “21000″ mark in the early trades however profit taking in heavyweights trimmed the gains in the middle.”

 The buoyancy in the IT majors combined with renewed buying in select private banking counters again shifted the bias in favor of bulls, which eventually helped the index to settle in green at 20,969.40 levels. After the days of outperformance, the broader indices were slightly on the back foot and ended lower.

‘’The rotational buying across heavyweights is fueling the up move and we see the same trend to continue. In case of any dip, Nifty is likely to hold the 20,700-20,800 zone while profit-taking may reemerge around the 21,200 level. Amid all, traders should stay focused on stock selection and prefer banking and IT for long trades and pick selectively from others,” added Mishra.

‘’Despite overbought technical conditions, the short-term technical outlook for markets continues to be in favor of the bulls, with support for Nifty placed at 20,777-20,521 levels and resistance at 21,121-21,331 range,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 08 Dec 2023, 10:07 PM IST

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