The past 6 trading sessions have been a milestone in their own way. FIIs have been net buyers everyday for the past 6 sessions. On March 27th FIIs bought as much as Rs 11,111.25 crore in a single session. Just to put in context FIIs bought Rs 12,611.79 crore in the entire month last September. In fact what FIIs bought in a single session yesterday was more than what they bought in two consecutive months last year- June and July. They bought a total of Rs 7,445.30 crore between June and July, 2024.
The key question then is what changed? What is fuelling the FII buying spree? Market experts that we spoke to listed out many factors that are helping the changing trend. Deven Choksey, Managing Director of DRChoksey FinServ explained that, “FII buying had to return. Given the fact that the rupee is appreciating, it is but natural to see the FIIs returning. The 3 Cs- Currency appreciation, crude price under control and consumption push is definitely helping lift sentiment. Moreover, the 2 important ‘I’s are showing encouraging signs- Inflation is cooling off and interest rates are coming down. All these factors is helping the optimistic outlook for India. As a result you are seeing FIIs back in action, buying in Indian equities.”
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The renewed buying by FIIs are on the back of a number of factors. These include
1. Short covering by FIIs
The markets have seen a steep rally in the past few weeks. A lot of it is on the back of short covering, predominantly by FIIs. According to market veteran Arun Kejriwal, “The current FII buying has more to do with the fact that they have been short in this series to a great extent and you are seeing significant short covering. Moreover, the market went up almost 1900 points- this rally was both steep and unprecedented. This kind of price movement also gave impetus to FII buying.”
Devarsh Vakil, Head of Prime Research at HDFC Securities added that, “We are initiating the April series with an unprecedented open interest of 1,145 crore shares in the stock futures segment. Foreign Institutional Investors (FIIs) have begun covering their short positions from the March series.
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