DIIs pump $14 bn in equities in 2017,outshine FPIs investment

Domestic investors flocked to the Indian equity markets in a big way with a net inflow of USD 14 billion (Rs 90,700 crore) in 2017, which is almost double the investment made by foreign investors, a report by Morningstar said today.
The increasing participation of domestic institutional investors (DIIs) compared to foreign portfolio investors (FPIs), reduces the dependence on foreign money giving much needed stability to the markets which is desirable.
"Not only Indian managers, but also investors have started seeing market corrections as an investment opportunity and they try to make the most of it by continuing their investments, which is an ideal scenario," Himanshu Srivastava, Senior Research Analyst - Manager Research at Morningstar said.

According to the report, domestic investors purchased stocks worth USD 14 billion (Rs 90,700 crore) last year, in comparison, FPIs made investment to the tune of USD 7.77 billion (over Rs 51,000 crore) in equities.
In 2017, DIIs were net sellers in equities only in the month of March; barring that, they remained net buyers in other months.
Interestingly, they bought into Indian equities whenever FIIs were net sellers -- for instance in the months of January, August, September and December of 2017.

"This I believe is a first step towards a matured Indian equity markets," he added.
Generally, FPI flow tends to be unpredictable as it can move in and out of the markets at quick intervals.

The move could be attributed to the investment opportunities available at the manager's disposal and the investment pattern with which the fund is run.
"While DIIs' do not have an option than to scout for investment opportunities within India; most of the FPIs on the other hand have global mandates and hence continue to compare India with other markets to evaluate which stands better on risk-reward profile.
"Hence for them, India is one of the many investment destinations and they would not hesitate to shun India for a better opportunity elsewhere. India must therefore consistently compete with other comparable markets to attract higher chunk of FPI flows and ensure that it is better poised in terms of risk reward profile compared to them," Srivastava said.