V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlights a crucial trend in the market with implications for retail investors—the resurgence of the tug of war between Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs).
In the past two days, FIIs have significantly offloaded equity, amounting to Rs 20,480 crores. This sell-off is attributed partly to the surge in US bond yields, reaching 4.16%, and partly to the high valuations in the Indian stock market. Notably, the major portion of FII Asset Under Management (AUM) is invested in banks, particularly impacting HDFC Bank.
Vijayakumar observes that, historically, in the tug of war between FIIs and DIIs, DIIs have consistently emerged victorious in the medium to long term. Although FII selling may cause short-term market fluctuations, it has often presented buying opportunities. The recent FII selling, driven by external factors, is viewed as a chance to enter the market.
Interestingly, despite excessive valuations, the mid and small-cap segments remain robust due to sustained buying and the absence of selling pressure from FIIs. Vijayakumar anticipates that this apparent anomaly will be rectified in due course.
On Friday, the BSE Sensex witnessed a gain of 437 points, reaching 71,624 points. However, it's noted that the Sensex relinquished some of its gains. Bharti Airtel recorded a 3% increase, while Axis Bank saw a 2% rise, reflecting the dynamic nature of the market amid the ongoing tug of war between FIIs and DIIs.
(With Agency Inputs)
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