‘Domestic savers to offset foreign investor exodus’: experts

Despite record FII outflows, domestic investors remain confident in Indian equity markets for medium-term returns, analysts say.

October’s record pullback from Indian markets by foreign institutional and portfolio investors (FIIs and FPIs) may not deter inflows from domestic investors into Indian equity markets as they remain confident of the returns in the medium-term, according to market analysts.

Although Dalal Street may remain volatile in the short term thanks to FII exits, it will stabilise in the medium term, they said.

FIIs sold the most Indian equities in October, making it the worst month in the Indian equity markets for foreign investors, according to data from Centre for Monitoring Indian Economy (CMIE).

In October alone, FIIs sold a net ₹94,000 crore in equities, reversing the ₹57,000 crore inflows received from them in the previous month.

“Ordinary investors should be prepared for more volatility in the near term. I advise caution, especially if FII outflows persist” said Trivesh D, chief operating officer of Tradejini, a Bengaluru-based zero-brokerage firm.

While FIIs are more opportunistic, looking for value wherever it can be found, domestic institutional investors (DIIs) exhibit confidence in the Indian markets, he added.

According to experts, the steady DII buying kept the market buoyant despite the FII outflows. “The structural nature of these investments, which include retirement assets, will not lead to DII selling in the medium term despite a short-term volatility,” said Atul Parakh, CEO, Bigul, a Navi Mumbai-based brokerage firm.