fii selling: Good news! Party on D-Street set to continue with or without FIIs

Mumbai: After betting heavily on India over the past two years, foreign institutional investors (FIIs) have turned their backs on Dalal Street, which remains one of the best performing markets in the world in 2022.

Indian equities have seen record outflows of $24bn year-to-date

The financial services sector, where FII participation is very high, recorded net outflows of Rs 39,849 crore through September, much higher than net outflows of Rs 1,342 crore in the same period last year.

Aggressive rate hikes by the US Federal Reserve and central banks in Europe amid persistent inflation weighed heavily on growth and sparked recession fears among the two global growth drivers.

This led to FIIs booking profits into stocks and investing their money in the haven dollar. The dollar index is up more than 17% year-to-date, hitting a more than two-decade high in September at 114.78.

“The main trigger for FPI selling is the continued rise in the dollar and the expectation that the dollar will remain strong in the current global macro construct. A reversal in FPI selling will occur when the dollar shows signs of a peak and reversal,” said VK Vijayakumar, Chief Investment Strategist at


Good things
Despite strong selling by FIIs, India has distinguished itself in the global arena and shrugged off global headwinds.

“If you need proof that Wall Street and FIIs know next to nothing about investing, look no further than their sales data for India over the last 18-20 months. It takes special idiocy to sell the best (performing) market in the world,” market veteran Shankar Sharma tweeted.

India has been largely immune to global economic shocks thanks to strong inflows from domestic institutional and retail investors.

At a time when outflows from FIIs are at a record high, DIIs have set a record in buying Indian equities. They have bought Rs 1.64 crore net worth of shares so far in 2022.

But inflows from FIIs over the past two years have fueled India’s significant outperformance of its peers, and strong buying support from DIIs this year has helped them sustain it.

The phenomenal rise of Indian equities relative to their peers has resulted in unprecedented positioning in the MSCI Emerging Market (EM) Index. According to Nuvama Alternatives & Quant Research, India’s weighting in the MSCI EM has doubled in two years from around 8% before October 2020 to 15.5%.

In terms of ranking within the emerging markets basket, India now ranks second, followed by Taiwan and South Korea. This is in contrast to the 4th position it held in October 2020.

So if data is to be trusted, it could very well be said that the party on D-Street is on with or without FIIs!

(With contributions by Ritesh Presswala)

(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times) fii selling: Good news! Party on D-Street set to continue with or without FIIs

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