FII Sell-Off vs. DII Buying: The Tug-of-War Unfolds in Stock Market
Bombay Stock Exchange Image credit X.com
Stock Market Today: Domestic Fund Houses Rise to Counter Sell-Off by FIIs
By S Jha
New Delhi, February 11: The stock market on Tuesday witnessed intense tug-of-war between the foreign institutional investors (FIIs) and the domestic institutional investors (DIIs). The FIIs stayed marginally ahead in dumping the Indian equities.
The FIIs had a net sell of equities worth ₹4486 crores on Tuesday. The DIIs recorded a net buy in the equities worth ₹4004 crores.
Amid the tug-of-war, the indices nosedived. Nifty lost over 300 points by close of the market. Sensex dived by over 1000 points.
Broader stock market favoured the bear. Advance and decline ratio were 1:10 of stocks. An all-round sell-off deepened the negative sentiments.
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But there were visible signs of a fightback. The Reserve Bank of India (RBI) led the fightback in defending rupee. Due to intervention of the RBI, rupee recovered from the lows to close at about ₹86.50 against a dollar.
The crash in rupee also figured in Budget discussion in the Rajya Sabha. Union Minister for Finance Nirmala Sitharaman quoted former RBI Governor Raghuram Rajan to defend the depreciation of rupee in the Rajya Sabha.
The domestic fightback against the sell-off led by the FIIs was seen yesterday also. The FIIs had sold stocks worth ₹2,463.72 crore on Monday. But the DIIs bought stocks amounting to ₹1,515.52 crore.
Market participants stated that a broader trend is emerging where DIIs are stepping up buying into the Indian equities. Analysts argued that the market has remained relatively stable due to DII support.
Analysts are keeping eyes on the possibility of the DIIs getting exhausted in supporting the market. They state that the FIIs may turn buyers when the DIIs get exhausted in supporting the market.
The stakes of the FIIs and the DIIs have also converged in the Indian stock market. Chartered accountant Vivek Khatri in a post on X said that the FIIs and the DIIs now each hold about 17.5 per cent stakes in the Indian stock market.
Khatri said that the FIIs have shed almost five per cent of stakes in the stock market since 2015. But the DIIs have stepped up participation to cover up for the space vacated by the FIIs.
Zafar Shaikh, a market participant, however, said that the market sell-off is aligned with the activities of the FIIs. Possibly, the retailers are selling in panic to account for sharp corrections in small and midcap stocks, argued analysts.
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