As bulls stare at 7 days of FII selling on D-Street, can you expect sustained inflows anytime soon?

FIIs have net sold Indian equities for seven days in a row, marking their longest selling spree in about five months. Can you expect them to make a comeback to Dalal Street anytime soon?

FIIs have withdrawn a net Rs 8,549 crore from Indian equities while DIIs have made net purchases of Rs 9,779.85 crore in seven days till August 4, according to exchange data. | Image: Reuters

Foreign institutional investors (FIIs) have remained net sellers of Indian shares for seven days running — their longest selling spree in almost 20 weeks. According to provisional exchange data, FIIs have net offloaded equities worth Rs 8,549 crore on Dalal Street since July 26, averaging at Rs 1,221.3 crore per day.

FII outflows in nine back-to-back days of vigorous selling in mid-March totaled Rs 14,577.4 crore, according to data. The latest bout of selling is the worst since.

FII & DII fund flow from July 27 to August 4

Date	Net sale/purchase (in crore rupees)
Date	FII	DII
August 4, 2023	-556.3	366.6
August 3, 2023	-317.5	1,729.2
August 2, 2023	-1,877.8	-2.2
August 1, 2023	-92.9	1,035.7
July 31, 2023	-701.2	2,488.1
July 28, 2023	-1,023.9	1,634.4
July 27, 2023	-3,979.4	-2,528.2

From March 9 to March 21

Date	Net sale/purchase (in crore rupees)
Date	FII	DII
March 21, 2023	-1,454.6	1,946.1
March 20, 2023	-2,545.9	2,876.6
March 17, 2023	-1,766.5	1,817.1
March 16, 2023	-282.1	2,051.5
March 15, 2023	-1,271.3	1,823.9
March 14, 2023	-3,087	2,121.9
March 13, 2023	-1,546.9	1,418.6
March 10, 2023	-2,061.5	1,350.1
March 9, 2023	-561.8	42.4

The Nifty has lost 261.3 points or 1.3 per cent in the seven-day period while the Nifty Bank has shed 1,182.9 points or 2.6 per cent. While financial auto and oil & gas weighed on the index during this period, gains in IT and healthcare shares lent some support.

nifty live share market today

The question is: Is there a comeback in the making, especially one that can take the blue-chip index past its all-time high of 19,991.9, registered on July 20? Many analysts are hopeful.

"One can expect an FII inflow-backed rally to record highs very soon," AK Prabhakar, Head of Research at IDBI Capital, told Zeebiz.com.

"Time is something we can not predict but the market will move up in a big way," he said.

Why are FIIs turning away from Dalal Street?

"The rising bond yield in the US is a near-term challenge. When the US 10-year is yielding 4.16 per cent, there will be only limited appetite for Indian equity at high valuations... However, the situation may change soon," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

"If the US disinflation trend sustains and the economy shows signs of weakening, the bond yields may drift down facilitating more inflows into India. Since DII buying is more than compensating for FII selling, the market can remain resilient.

It was rapid buying by FIIs that powered a near-one-sided liquidity-driven rally on Dalal Street in 2021. As of August 4, the Nifty and the Nifty Bank are within 2.4 per cent and 3.3 per cent of their all-time highs respectively.

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As bulls stare at 7 days of FII selling on D-Street, can you expect sustained inflows anytime soon?

FIIs have net sold Indian equities for seven days in a row, marking their longest selling spree in about five months. Can you expect them to make a comeback to Dalal Street anytime soon?

Why are FIIs turning away from Dalal Street?

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