Market witnesses buying interest from DIIs amid rise in participation from MFs and SIPs in FY22

Benchmark indices Sensex and Nifty50 have gained over 18 and 19 per cent respectively in the financial year 2021-22. The surge was mainly led by large domestic institutional investors (DIIs) inflows, experts believe. 

According to Kotak Institutional Equities, “the Indian market has seen large DII inflows for the past several months, which robust inflows into domestic Mutual Funds in turn 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 of retail investors in equity markets over the pandemic.” 

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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.  

“It would be interesting to see the investment behavior of retail investors after a ‘long’ period of low returns from equity markets, especially if return expectations from other asset classes such as bank deposits and real estate were to increase from current low levels,” the brokerage said. 

The brokerage noted that the market has been largely flat over the past 6-7 months, but retail investors have continued to invest aggressively, assuming they are looking at the same earnings and valuations as FPIs from the market. 

On the contrary, the market has seen large FPI (Foreign Portfolio Investors) outflows in the past few months. Outflows have accelerated in first quarter of calendar year 2022 after large inflows in the primary market but large outflows in the secondary market in fourth quarter of CY21.  

In terms of figures, FPIs have sold US $19 billion, and DIIs have bought US $29 billion in Financial year to-date 2021-22. Similarly, FPIs ownership of Indian market went down to 18.5 per cent at February-end 2022. 

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)