Why FIIs investing now

Can anybody tell me why FIIs are investing so heavily when market is at high? Please only logical answers…

I have also noticed that while FII are investing, DII are selling off. I am not an expert but my thoughts as under. Please correct me if I am wrong.

  1. Low bond interests are pushing FII to seek risky investment opportunities offshore. India is an emerging market for them. Thus all eyes here.

  2. Covid 2nd wave is already there in US and Europe which would affect economy again. While India is little behind the virus curve. There is a lag. Also, covid hasn’t affected so much as US etc despite the population. So there is a window of opportunity to put money in India until India catches up the 2nd wave, if it happens so. Uncertainty is there.

  3. The equation between Rupee and Dollar. Gives them a multiplier power.

  4. Certain economic policy changes in India may look lucrative for foreign investors.

  5. US financial year is from Jan to Dec. And profit booking, rebalancing would happen for effective taxation purposes etc. Now that they can’t invest the profits booked back in their market due to #1,2,3,4 above, they are seeking offshore opportunities to make the most of their money in such times.

Like I mentioned above I am not an expert and I may be wrong. If so, I would request someone to correct me and help me learn.

6 Likes

makes sense… and while markets are soaring new highs, institutions will already have their portfolio’s hedged for inevitable fall.

1 Like

Another reason is India’s growth forecast in year 2021 is highest in the world.

Your Comment is highly appreciated, please give me a chance to ask if it is a good time or is it okay to invest in the stock market now?

@Akwin can I rather tell you something - don’t ever invest your hard-earned money by someone’s saying. Whoever it be. Please do your own research. Take an informed decision and be responsible for it. Also, knowing that in case you turn out wrong, you accept it, learn from it, and sharpen your skills.

On a different note, I would like to share a paragraph from one of my favourite books - Zen and the art of motorcycle maintenance.

“Mountains should be climbed with as little effort as possible and without desire. The reality of your own nature should determine the speed. If you become restless, speed up. If you become winded, slow down. You climb the mountain in an equilibrium between restlessness and exhaustion. Then, when you’re no longer thinking ahead, each footstep isn’t just a means to an end but a unique event in itself…To live only for some future goal is shallow. It’s the sides of the mountains which sustain life, not the top. Here’s where things grow. But of course, without the top you can’t have any sides. It’s the top that defines the sides. So on we go……we have a long way……no hurry……just one step after the next.”

I think holds true for investing as well.

Might also be true for life and entrepreneurship. What say @nithin

2 Likes

Yep, absolutely. Trading, Entrepreneurship, life, etc same rules needed to increase the odds of winning, but ain’t nothing guaranteed.

Is it a good time, maybe not, it sure does smell like a bubble. Check this which @nik had shared.

https://twitter.com/nikhilkamathcio/status/1336207866550575104

But the issue is that no one knows how big the bubble gets. Maybe it isn’t the top because you are asking the question before investing and not after.
But, no one can time the market. If you haven’t invested, take the portion of your capital that you can afford to lose and start investing/trading. Don’t increase the capital until you start doing well for yourself. This might help

1 Like

I have a related query to both @nithin and @nik:

As we can see that FII are pouring money into India due to liquidity, I also observed that foreign retailers too are pumping money in India. When I speak to my college friends, who are now NRI and well-settled in the US, I hear from them raising their stake in Indian equities and still going strong. So both FII and foreign retailers are inclined towards Indian equities.

On the other hand, I could sense that Indian investors have a growing interest in investing in US equities. The rising AUM of Motilal S&P 500 and other International Investment Funds, Nasdaq 100 trade volume, Rising popularity of apps and services like Vested to enable an Indian investor to buy an entire US stock or even a fractional value of it. One of the reasons, Indian investors invest in US securities is to take advantage of Rupee depreciation against the dollar. I don’t know about where DII is investing after selling off heavily, as I haven’t followed that space. But demand is there for sure from Indian retailers to invest in US securities. On this forum too, there is a lot of anticipation on why is Zerodha taking so long to offer US investing.

So my question to both of you is - Where is this ‘grass is greener on the other side’ leading us to?

1 Like

@nik isn’t active here.

This US investing is just overhyped. Other than the super-rich Indians no one is really sending money to invest in US stocks. I know the current size of the market, it is really really small.

About money coming from outside to India, I guess we know that this is because of all the money that has been printed in the last few years and this money getting concentrated with a few folks who are just chasing returns wherever possible in the world. India has a growth story of some form going for it which is attracting all this money.

8 Likes

100%!

Hello,

I have one basic doubt. When Rupee is strong actually Foreign investors will get lesser rupees and thereby lesser stocks in investments. Actually the disinvestment will work better for them to get more dollars now. then why still investments are flowing in? Please correct me where my understanding is wrong.

Thanks in advance.

RBI is currently buying all dollars entering India otherwise rupee would have been much more stronger and for the same reason FED has kept India on watchlist of currency manipulators.
Also bond yields are close to zero in west so they are looking at emerging economies.

1 Like

Yes, I agree that FII is increasing as our economy has faced a financial crunch due to COVID pandemic. And our economy is recovering which has higher growth potential.

FIIs are always “momentum” players , they are kind of investor traders, where as DIIs are the Investors, DIIs normally invest , when market crashes , and exit at high, .I think DIIs are now taking profit , where as FIIs are looking at momentum’s and one fine day FIIs dump the stocks & cash in