If you are a confident investor who feels that in October, the net withdrawal of foreign capital from Dalal Street was only Rs 8 crore, this is a wake-up call for you. Currently, Rs 6,100 crore is the amount that FIIs have pulled out from just two sectors: financial services and oil and gas. Aside from that, the other sectors that suffered outflows are real estate and FMCG.
After withdrawing Rs 1,673 crore from financial statements in September, in the 10th month, the players’, FIIs were net sellers of Rs 4,686 crore in the sector. Banks, which are often believed to be the standards for the Indian development narrative, are the greatest bet of FIIs on Dalal Street, accompanied by IT.
Therefore, perhaps, IT stocks witnessed a buy-in dip in them by the FIIs. In the sector, they were sellers to the extent of over Rs 9,200 crore in September. The largest purchases were in construction (Rs 1,289 crore) and power (Rs 977 crore).
This most recent action by FII, is it a moment of concern?
Despite FII promotion, strong value momentum was evident in bank shares due to the healthy operating efficiency stated by banks. In October, Nifty Bank increased by over 6%, led by regional non-public banks and PSU banks.
“Majority of banking institutions have reported healthy credit creation, and those which possess a great ratio of the portfolio of floating-rate loan, which is generally observed modest margin increase as well.” The resulting high operating efficiency has very legitly been a tailwind for the stock.
Analysts are optimistic about PSU banks due to their good quarterly efficiency, which is driven by the power of amazing asset top-quality development and a positive stimulus in credit score growth.
Analysts and financial experts are feeling bullish vibes over this upwards trend by banks.
And if you believe this is the first time, think again; we bought some similar kind of worrying event from the past.
Continue reading to understand more about the D-street and the corresponding incidents involving FII from this year.
News from September 2022.
A spike in the United States’ 10-year bond yield, which is followed by a powerful dollar index pushed foreign institutional investors to exit emerging countries. A drop in banking system liquidity, a weak currency, and a present premium valuation, all of the aforementioned factors are arrowing toward a bearish market image in the short term. When talking about the cash unit of the Indian equities markets, FIIs became net sellers for over Rs 2,500 crore.
The event of a surge in US bond rates, along with selling by foreign institutional investors, dampened morale. Markets have been under pressure after exhibiting resilience for a noteworthy period of time, and early indicators are pointing to more collapse.
Moment of Confusion.
The quarterly results season affirms the intrinsic resilience of the Indian economy in the middle of global economic concerns, despite many missteps. Bank Q2 data have been good, aided by appreciating loan growth, increasing asset quality, and growing margins, while IT results have been on track with growth to be admired.
Since October 21, FIIs have invested in a total of Rs 24,899.59 crore (nearly $3 billion), as per NSDL statistics. The most aggressive purchasing is supposed to take place within two days before the conclusion of the US Fed meeting on November 2, and it doesn’t stop here. The same continued even after Powell’s hawkish statements signaled that interest rates would rise faster than the anticipated dates.
Domestic institutional investors, or DIIs, have been seen as busy in recording profits over the period, which is strange. DIIs have been net purchasers that have amounted only once in the previous ten sessions and have sold equities worth Rs 6,779.93 crore.
So, what is it that is causing FIIs to buy more full buckets of Indian stocks? Here are the main reasons:
FOMO(Fear of Missing Out)
Because of the local flows, Dalal Street has presented itself as an island of serenity during the upheaval in global markets watched in 2022. Though there is a 9% down in The Dow Jones, the Nifty has marked more than 5% and is seen approaching all-time highs.
The Indian economy has shown a sense of reliability despite increasing interest rates. This is causing one of the reasons for panic among global-level investors.
There has been observance of a remarkable amount of growth as the bank Q2 data have been good, with an upward trend in the category of loans, increasing asset quality, and growing margins, while IT results with good growth have been on track.
“In the future, there is a hope of a good flow India is consistent about its economic narrative.
The final words of wisdom – Is Rupee still having strength?
There is a glimpse of the strength of The Indian rupee as it can be seen that the US dollar index fell from a high of around 115 to a low in the sub-110 zone. The native currency, the great Rupee rose to a one-month high of 81.39 against the US dollar Monday, after falling in the last month to a historic low of 83.32.
Previously, a notable amount of blame was given to currency devaluation on the FII outflow. “FIIs are expected to purchase more if the dollar index falls below the mark, say 110. Only after hitting the all-time peak of 18,604 is the Nifty likely to have a definite fall.
edited and proofread by nikita sharma