Summary:
The changing dynamics in the Indian stock market, particularly the role of foreign institutional investors (FIIs) and domestic institutional investors (DIIs).
Some key points:-
In the last three years, FIIs have returned to India, investing around $7.4 billion in 2021 YTD. FII holdings have increased over the last 20 years and now account for around 22-23% of the BSE-500 index.
India has been an attractive destination for FIIs due to factors like hopes for economic recovery, a weak dollar, and government stimulus measures.
However, the market is no longer dominated solely by FIIs. The share of retail, high net worth individuals, and domestic mutual funds has also increased, especially since the COVID-19 pandemic.
While FII and DII flows can be indicators, investors should focus on fundamentals and valuations rather than just following the money flows.
