New Delhi, October 17
Indian stock markets are witnessing a significant shift in investment patterns. Traditionally, foreign investors, often referred to as market movers, have had a dominant influence in the market.
However, a noticeable change has emerged, with domestic investors now outpacing their foreign counterparts in terms of activity and impact.
As per National Securities Depository Limited (NSDL) data Foreign Portfolio Investors (FPIs) offloaded equities worth a staggering Rs 67,834 crore in the first 15 days of October, marking a record highest selling spree by FIIs in Indian stock market history for any single month.
The massive sell-off by FIIs this month has even surpassed the COVID-19 sell-off in March 2020, when foreign investors sold equities worth Rs 61,972.75 crore.
However, data from the National Stock Exchange (NSE) indicates that domestic investors (DIIs) have infused Rs 63,981.54 crore into the markets during the same 15-day period. This investment by domestic investors is also at a historic high and has given much-needed support to the Indian markets. This shift in trend was apparent for some time but it is more evident this month.
Despite the historic high selling by FPIs this month, India's key indices, such as the Nifty 50, have shown resilience. The Nifty 50 is down only by around 5.32 per cent from its all-time high, which highlights the increasing role of domestic investors in stabilizing the market.
This resilience is largely attributed to strong buying by DIIs, who have provided a much-needed buffer against foreign outflows. The support from domestic investors has helped prevent a sharp decline in the major indices, despite the aggressive selling by foreign investors.
This trend points to a crucial transition in the Indian stock markets, where domestic investors are increasingly playing a pivotal role in balancing the market dynamics. Their active participation is helping to cushion the impact of foreign outflows, ensuring that Indian indices remain stable and don't experience a major fall.
This shift could be a step toward making Indian markets more self-reliant, or "Atmanirbhar," in terms of investment flows. The heavy investments by domestic players are acting as a safeguard against foreign investor's withdrawal shocks.
As the Indian economy continues to grow, this shift in investment patterns could lead to reduced dependence on foreign investments and make the market more resilient to global financial shocks.