FII Position in Indian Stock Market, Stock Market News Updates
One of the important statistics that everyone checks before trading is whether the
FIIs are buying or selling. Foreign Institutional Investors (FIIs) are large global
funds who bring the power of dollars into Indian markets. Some of these funds are
incredibly large. For example some of the world’s largest FIIs like Blackrock, Vanguard
and Templeton manage trillions of dollars and their AUM is more than the market
cap of the entire Indian market. Normally, FIIs allocate funds in bulk and that
is why the FII numbers become so critical in determining the direction of the market.
FII positions in Indian stock market are reported on a daily basis by the custodians
NSDL and CDSL to SEBI. They report the FII net buying in equity and the FII net
buying in debt on a daily basis.
FII positions in Indian stock markets – How LKP Securities analyzes the same…
As part of its regular stock market news updates, LKP Securities has a dedicated
page for FII positions in Indian stock markets on a daily basis. The page captures
the FII gross buying and the FII gross selling on a daily basis in equity and debt.
The net buying or selling in equity and debt is reported separately. Normally, sharp
corrections in the Indian market have been accompanied by heavy selling by FIIs
while it is only when FIIs started buying in bulk that you find the markets moving
up to new levels. While Indian MFs have emerged as a veritable player in the equity
and debt markets, FIIs continue to determine the momentum and direction of the market.
Why FII positions are so important to traders and investors…
- The FII buying or selling trend is the normal trigger for the direction
of the market. Typically traders prefer to trade on the long side or on the short
side when the support of FIIs is in the same direction.
- FIIs are driven more by macro level factors. Also, FIIs look at
India as one of the emerging markets apart from other EMs like China, Thailand,
Taiwan and Korea in Asia. FII buying or selling is also an indicator of relative
attractiveness of the Indian stock market.
- FII buying and selling debt is again very critical from the point
of view of the interest rates. RBI normally endeavours to keep the Indian rates
high enough to maintain a gap with the US debt markets. If FIIs are selling in the
debt markets then it could force the RBI to keep interest rates higher and that
means rate cuts could be ruled out.
- FIIs are significant for the Indian markets because they have a
direct impact on the floating stock as well as on currency movements. Large scale
FII buying normally leads to appreciation of the rupee while the INR tends to weaken
if FIIs are selling en masse. FII direction gives important cues on this front.
Of course, FII data has to be juxtaposed with a host of other fundamental and technical
factors. But, it remains a crucial input for traders and investors, nevertheless.