![\"Institutional](\"\/wp-content\/uploads\/2020\/10\/equity-markets-2-1.jpg\")
<\/figure>\n\n\n\nWhat does the FII and DII inflow and outflow data signify?<\/strong> <\/h2>\n\n\n\nThe trading\nactivity of both the FIIs and the DIIs are recorded for every single trading\nsession by the stock exchanges. The data is then compiled into monthly reports\nand is published in the public domain for investors to see. Let\u2019s take a look\nat the trading activity of both FIIs and the DIIs during the previous 5\nmonths. <\/p>\n\n\n\n
FII data (Rs. in Crores) & DII data (Rs. in Crores)<\/strong><\/p>\n\n Date<\/strong>\n <\/td>\n Gross Purchases<\/strong>\n <\/td>\n Gross Sales<\/strong>\n <\/td>\n Net Purchases \/ (Net Sales)<\/strong>\n <\/td>\n Gross Purchases<\/strong>\n <\/td>\n Gross Sales<\/strong>\n <\/td>\n Net Purchases \/ (Net Sales)<\/strong>\n <\/td><\/tr>\n April\n <\/td> \n 122,483.01\n <\/td> \n 127,691.51\n <\/td> \n (5,208.50)\n <\/td> \n 75,066.03\n <\/td> \n 75,183.03\n <\/td> \n (117.00)\n <\/td><\/tr> \n May\n <\/td> \n 155,977.41\n <\/td> \n 142,062.92\n <\/td> \n 13,914.49\n <\/td> \n 87,531.66\n <\/td> \n 75,238.4\n <\/td> \n 12,293.19\n <\/td><\/tr> \n June\n <\/td> \n 155,215.80\n <\/td> \n 149,722.85\n <\/td> \n 5,492.95\n <\/td> \n 100,174.07\n <\/td> \n 97,739.67\n <\/td> \n 2,434.40\n <\/td><\/tr> \n July\n <\/td> \n 113,501.55\n <\/td> \n 111,011.36\n <\/td> \n 2,490.19\n <\/td> \n 89,373.83\n <\/td> \n 99,381.71\n <\/td> \n (10,007.88)\n <\/td><\/tr> \n August\n <\/td> \n 131,434.85\n <\/td> \n 115,684.99\n <\/td> \n 15,749.86\n <\/td> \n 77,599.64\n <\/td> \n 88,646.42\n <\/td> \n (11,046.78)\n <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\nIn the month of\nApril, 2020, right around the time of the nationwide lockdown, both FIIs and\nDIIs pulled out their investments from the equity markets. This led to a net\noutflow of money of around Rs. 5,208.50 crores and Rs. 117 crores respectively.\n<\/p>\n\n\n\n
However, once the\nmarkets started to bounce back from the steep lows in March and April, 2020,\nboth the FIIs and the DIIs started to come back into the market by buying more\nnumber of shares. This led to a net inflow of money from both these market\nparticipants. From this data, we can infer that in the first three months\nstarting from April, 2020 both the FIIs and the DIIs seemed to be moving in\ntandem with each other. <\/p>\n\n\n\n
That said, the last\ncouple of months, specifically, July and August, seem to paint a different\npicture altogether. In a surprising move, the flow of money from these two\ncategories of institutional investors moved in opposite directions. The FIIs\npumped in money into the equity markets and created a net inflow, while the\nDIIs exited it and created a net outflow. <\/p>\n\n\n\n
Why has the FII and DII flow into the equity markets been moving in the opposite directions?<\/strong> <\/h2>\n\n\n\nAccording to a\nresearch conducted on the trading behaviour of both FIIs and DIIs in the Indian\nstock market scenario, it is quite evident that they adopt opposite trading\nstrategies. FIIs adopt a positive feedback trading strategy, while the DIIs\nadopt negative feedback trading strategies and are known for their contrarian\nviews.<\/p>\n\n\n\n
When market\nparticipants take positions that are in tandem with the market movement, it is\nusually termed as \u2018positive feedback investing.\u2019 For instance, if the market is\nmoving upward, positive feedback investors tend to buy shares. And when the\nmarkets are moving downward, they tend to sell their shares. <\/p>\n\n\n\n
When market\nparticipants take positions that are opposite to that of the market movement,\nthe strategy is termed as \u2018contrarian investing\u2019 or \u2018negative feedback\ninvesting.\u2019 For instance, if the market is moving upward, negative feedback\ninvestors tend to book profits by selling shares. And when the markets are\nmoving downward, they tend to pick up shares. <\/p>\n\n\n\n
Applying this\nresearch finding into the current market scenario, it becomes quite obvious as\nto why the flows from FIIs and DIIs have been moving in the opposite\ndirections. As the markets almost fully recovered from the sell-off, FIIs, with\ntheir positive feedback trading strategy, started lapping up the shares of\nvarious companies. As the markets continued to move upward, the FIIs went along\nwith the flow, thereby creating a net inflow for the months of July and August,\n2020. <\/p>\n\n\n\n
Meanwhile, when the\nmarkets bounced back and moved upwards, the DIIs, with their contrarian views\nand negative feedback trading strategy, started to book profits by selling\ntheir holdings. This ultimately created a net outflow for the months in\ncontention. <\/p>\n\n\n\n
Additional Read:<\/strong> Here\nare some Investment Tips by Experts for Post-pandemic World<\/a><\/p>\n\n\n\nConclusion<\/strong><\/h2>\n\n\n\nApart from the\nprofit booking motive, another reason for the net outflow of DIIs could be due\nto the need to increase their liquidity buffers. According to financial\nexperts, there\u2019s a high possibility of a spurt in the deal activity of many\nmajor large-cap companies in the near future. And by booking profits, DIIs have\neffectively opened themselves up for participation in these deals. <\/p>\n\n\n\n
Clearly, the\nmarkets are quite volatile now. And in uncertain times like these, it becomes\neven more essential to formulate a solid financial plan and a good wealth\nmanagement strategy to safeguard your investments. Here\u2019s where Tata Capital\u2019s wealth management\nsolutions<\/a> can be of help. By availing these services, you can protect your\ncorpus and ensure that it\u2019s placed in the right assets for long-term growth.<\/p>\n","protected":false},"excerpt":{"rendered":"In the stock market, retail investors are far from the only participants. In fact, institutional investors are the major contributors to the daily trading volume in both the equity and the derivative segments. <\/p>\n
\n Date<\/strong>\n <\/td>| \n Gross Purchases<\/strong>\n <\/td> | \n Gross Sales<\/strong>\n <\/td> | \n Net Purchases \/ (Net Sales)<\/strong>\n <\/td> | \n Gross Purchases<\/strong>\n <\/td> | \n Gross Sales<\/strong>\n <\/td> | \n Net Purchases \/ (Net Sales)<\/strong>\n <\/td><\/tr> | \n April\n <\/td> | \n 122,483.01\n <\/td> | \n 127,691.51\n <\/td> | \n (5,208.50)\n <\/td> | \n 75,066.03\n <\/td> | \n 75,183.03\n <\/td> | \n (117.00)\n <\/td><\/tr> | \n May\n <\/td> | \n 155,977.41\n <\/td> | \n 142,062.92\n <\/td> | \n 13,914.49\n <\/td> | \n 87,531.66\n <\/td> | \n 75,238.4\n <\/td> | \n 12,293.19\n <\/td><\/tr> | \n June\n <\/td> | \n 155,215.80\n <\/td> | \n 149,722.85\n <\/td> | \n 5,492.95\n <\/td> | \n 100,174.07\n <\/td> | \n 97,739.67\n <\/td> | \n 2,434.40\n <\/td><\/tr> | \n July\n <\/td> | \n 113,501.55\n <\/td> | \n 111,011.36\n <\/td> | \n 2,490.19\n <\/td> | \n 89,373.83\n <\/td> | \n 99,381.71\n <\/td> | \n (10,007.88)\n <\/td><\/tr> | \n August\n <\/td> | \n 131,434.85\n <\/td> | \n 115,684.99\n <\/td> | \n 15,749.86\n <\/td> | \n 77,599.64\n <\/td> | \n 88,646.42\n <\/td> | \n (11,046.78)\n <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n | In the month of\nApril, 2020, right around the time of the nationwide lockdown, both FIIs and\nDIIs pulled out their investments from the equity markets. This led to a net\noutflow of money of around Rs. 5,208.50 crores and Rs. 117 crores respectively.\n<\/p>\n\n\n\n However, once the\nmarkets started to bounce back from the steep lows in March and April, 2020,\nboth the FIIs and the DIIs started to come back into the market by buying more\nnumber of shares. This led to a net inflow of money from both these market\nparticipants. From this data, we can infer that in the first three months\nstarting from April, 2020 both the FIIs and the DIIs seemed to be moving in\ntandem with each other. <\/p>\n\n\n\n That said, the last\ncouple of months, specifically, July and August, seem to paint a different\npicture altogether. In a surprising move, the flow of money from these two\ncategories of institutional investors moved in opposite directions. The FIIs\npumped in money into the equity markets and created a net inflow, while the\nDIIs exited it and created a net outflow. <\/p>\n\n\n\n Why has the FII and DII flow into the equity markets been moving in the opposite directions?<\/strong> <\/h2>\n\n\n\nConclusion<\/strong><\/h2>\n\n\n\nIn the stock market, retail investors are far from the only participants. In fact, institutional investors are the major contributors to the daily trading volume in both the equity and the derivative segments. <\/p>\n |