Mumbai, 6 December (IANS). Analysts said on Saturday that the continuous fund outflow from foreign institutional investors (FIIs) paled in comparison to the heavy buying by domestic institutional investors (DIIs) due to the fall in the Indian currency this week.
In the initial week of this month, FIIs made continuous selling and sold Indian shares worth Rs 10,401 crore in the cash market.
VK Vijayakumar, chief investment strategist at Geojit Investments Ltd, said the FII selling data lagged behind continued strong buying by DIIs. DIIs bought equities worth Rs 19,783 crore during the same period.
Analysts say that the fundamental factors behind FII selling and DII buying are different. FIIs are increasing their selling due to the sharp fall of 5 paise in the rupee against the dollar this year. At the same time, DIIs are increasing their selling as they are getting support from continuous fund inflows. At the same time, they remain encouraged by strong GDP data and expectations of growth in corporate earnings in the future.
Meanwhile, 25 basis point cut in repo rate by central bank RBI and proposed huge cash inflow improved the sentiment in favor of bulls.
“The economy is already in a strong position and providing more monetary stimulus at a time like this shows the central bank being boldly pro-growth,” the analyst said.
He further said that with pro-growth fiscal and monetary policies, signs of pick-up in growth and earnings growth, DIIs will continue their buying.
Meanwhile, capital outflows by FIIs are likely to continue in the coming weeks despite strong domestic conditions.
“Trends indicate that FIIs will sell at higher levels as they feel valuations are at high levels and they can invest the money in cheaper markets through selling,” Vijayakumar said.
–IANS
SKT/
