Foreign Institutional Investors Continue to be Net Buyers in India’s Primary Market
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New Delhi, Jan 4 (NationPress) As the trend of foreign institutional investors (FII) selling in India remains a dominant topic in financial discussions, it is crucial to understand that this selling is primarily driven by high valuations present in the secondary market. In contrast, the primary market offers fair valuations, prompting these investors to sustain their presence, as stated by market analysts on Saturday.
Despite ongoing FII outflows, domestic institutional investors (DIIs) have retained their positive outlook on the market.
Experts indicate that while the perception of market weakness due to prolonged FII selling over the past three months holds some truth, it is equally important to recognize that FIIs have actively participated as buyers in the primary market, even amidst their cash market sales.
Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, “Even as they sell in the cash market through various exchanges, FIIs have remained buyers in the primary market, significantly through the Qualified Institutional Placement (QIP) channel.”
In December, FIIs sold equities worth Rs 2,590 crore through exchanges, yet they purchased equities amounting to Rs 18,036 crore in the 'primary market and others' category.
In the year 2024, while FIIs heavily sold equities worth Rs 121,210 crore, their purchases in the primary market totaled Rs 121,637 crore.
As a result, FIIs have net bought equities worth Rs 427 crores in 2024.
Looking ahead, it is expected that FIIs may continue to sell, particularly as the dollar strengthens and US bonds yield attractive returns. With the dollar index hovering around 109 and the 10-year bond yield exceeding 4.5 percent, these factors pose significant challenges for FII flows,” explained Kumar.
Despite the volatility in the stock market driven by geo-political uncertainties, FIIs have remained as net investors within the country, reflecting the resilience of India’s economy.
Manoj Purohit, Partner and Leader of Financial Services Tax at BDO India, attributes the renewed interest of foreign participants in the Indian market to several key factors.
Among these, he mentions recent policy changes in the US affecting peer nations, the stabilization of geopolitical tensions in the Middle East, as well as the effective management of inflation and interest rates.
