DIIs trump FIIs in net inflows in FY22 amid aggressive participation from retail investors

Domestic investors outperformed their foreign peers in terms of net inflows in Indian stock markets, according to brokerage firm Motilal Oswal. 

According to the report, Net inflows from the domestic institutional investors (DII) stood at US $26.8 billion as compared to net outflows of US $17 billion Foreign Institutional Investors (FII) in FY22, the brokerage firm said in its report on India Chartbook.  

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The previous high of DII inflows was at US $17.9 billion in FY20, according to the brokerage. 

Meanwhile, FIIs’ net outflows in FY22 were the highest in any given fiscal, higher than the net outflows of US $10.4 billion seen in FY09, the report also noted. 

These outflows accelerated in the first quarter of the calendar year 2022 after large inflows in the primary market but large outflows in the secondary market in the fourth quarter of CY21, Kotak Institutional Equities said.

According to Kotak Institutional Equities, “The Indian market has seen large DII inflows for the past several months in FY22, robust inflows into domestic Mutual Funds led by new investors and increase in SIP (Systematic Investment Plan) flows. India has also seen a surge in ‘active’ retail investors, along with greater involvement in the equity markets over the pandemic.”  

The rise in participation of retail investors perhaps is on the expectations of high returns from the market and are acting on their ‘positive’ expectations by investing aggressively directly and through Mutual Funds, the brokerage said in its report.   

The market expert and Anand Rathi Group Chairman – Anand Rathi in an exclusive conversation with Zee Business Managing Editor Anil Singhvi had earlier advised that the domestic/retail investors must not fear the selling pressure of foreign investors as India’s economy is strong and on a growth trajectory.