FIIs remain sellers in July - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

FIIs remain sellers in July

Jul 13, 2000

The much-anticipated rejuvenation of FII interest in Indian stock markets has proved baseless. After having been net sellers to the extent of Rs 9.4 bn in June, FIIs so far in July have made further net sales of Rs 1.1 bn. Why should FIIs remain sellers? Or alternatively, why aren't FIIs investing in domestic stock markets? There could be a number of explanations for this, the key one being disenchantment with the speed of second phase of reforms, which includes privatization of PSUs. The alternative reasons that could be forwarded are the relative attractiveness of other global markets, threat of aggression in the subcontinent (although nobody talks of it), unattractiveness and the possibility of a crash on the US bourses (which would put redemption pressures on such funds).

The markets surprisingly continue to hold onto the gains recorded earlier in June, when FIIs first showed a sign of lack of interest. In a recent article we had highlighted that FIIs, mutual funds and momentum investors had been sellers. However since then momentum investors have returned with a vengeance and have added net positions of about Rs 6 bn (and this is on the BSE alone). Probably this is what is holding the markets (mutual fund investment figures are not available on a timely basis).

The key question is whether momentum investors would continue to go long in absence of support from FIIs and mutual funds. This is unlikely, as ultimately momentum investors look at offloading their large positions in the markets. And if there is buying support from FIIs, momentum investors would either have to hold onto such positions (there will be an opportunity cost) or offload them into the market at a loss.

The present trend where FIIs and mutual funds are sellers and momentum investors are large buyers is probably unsustainable. In coming weeks what the FIIs do would be a key determinant of coming trend in the markets.

Equitymaster requests your view! Post a comment on "FIIs remain sellers in July". Click here!

  

More Views on News

Top 5 Recent IPO Developments You Should Know (Views On News)

May 12, 2021

So far in 2021, IPOs in India have raised nearly US$ 3 bn, the best start to the year since 2018.

How Did Mindtree Perform in Q4FY21? (Company Info)

Apr 20, 2021

Here's the rundown on the company's latest quarterly results.

5 Big IPOs to Look Forward to in 2021 (Views On News)

Jun 19, 2021

A peak into the hype around the IPOs of internet companies like Zomato and Paytm

HDFC Banking and Financial Services Fund: Emphasizes on the Growing Sector (Outside View)

Jun 18, 2021

PersonalFN analyses the features of HDFC Banking and Financial Services Fund and explains the potential this fund has to offer to its investors.

Can You Make More than 100 Times Your Investment? (Profit Hunter)

Jun 18, 2021

The open secret to multiplying your money in forever stocks.

More Views on News

Most Popular

Hotel Stocks Will Reward Investors (Fast Profits Daily)

Jun 8, 2021

This is why I'm bullish on the hotel and hospitality sector.

My 'Unlock' Investments (Fast Profits Daily)

Jun 11, 2021

The best unlock investments you can make in the market.

The Most Visible Sign of India's Revival is on Two Wheels (Profit Hunter)

Jun 9, 2021

Investing in the best stocks could result in wealth compounding on a massive scale.

How I Discovered a 400-Year-Old Open Secret to Extreme Wealth (Profit Hunter)

Jun 11, 2021

Charlie Munger's open secret about investing success.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Jun 18, 2021 (Close)

MARKET STATS