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

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Domestic buying v/s FII selling
Mon, 11 May Pre-Open

The Indian stock markets are currently facing a lot of volatility. From the highs of around 30,000 in the last week of January 2015, the markets are seemingly in a down trend. The reasons are many; earnings that were below expectations, the logjam in Parliament over key economic bills, the slowing down of the reform process, the FII taxation issue, etc. However, the main reason for the market fall is a different one.

As per an article in a leading financial daily, a well known foreign investor has shared some very interesting details. Did you know that the weightage given by FII to Indian markets relative to other emerging markets was the highest ever? India's weightage in the benchmark MSCI index is around 7.5%. At the start of the year, emerging market funds on average had invested over 12% of their corpus into India. It was an unprecedented overweight position! It is inevitable that a lot of this money will leave Indian shores for greener pastures. As FIIs hold 40-45% of the free float market cap of Indian stocks, we could be in for tough times ahead.

So who will pick up the slack? Believe it or not, it could be local investors! The data has already proven that retail investors are back in the markets. However, what is truly encouraging is the increasing participation of domestic institutions. It is no longer about LIC anymore. Indian mutual funds have invested about US$ 6.6 bn in FY15 the highest ever yearly figure in their history. Insurance firms are now slowly receiving funds again and will contribute to the buying interest. Then there is the efforts made by the government to allow the EPFO to invest a part of their corpus in to the equity markets.

We believe these moves could result in a significant counter weight to FII dominance of the Indian markets. In the long run domestic investors should take over the leadership position from FIIs. This would be a very positive development indeed. However, it will not happen overnight. So as the markets may experience volatility in the short term, ownership will certainly move to stronger hands in the long term.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Domestic buying v/s FII selling". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Agora Research Private Limited.

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Agora Research Private Limited (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.