DIIs make net investment of Rs 98,400 cr in markets in October

DIIs were buyers during the entire October and largely absorbed Rs 103,470 crore net sales by FPIs in October so far. However, FPIs were buyers in the primary market and bought shares for Rs 17,145 crore during this period. Some large IPOs enabled this big primary market investment. Net of the primary market purchase, the total FPI sell figure stands at Rs 83.097 crore during this period.

“The DII investment during October is an indication that domestic funds are optimistic about a recovery in the stock market. The market fall was triggered by FPI sell-off. Huge investment by DIIs prevented a big crash in the market in October,” said an analyst.

Mutual funds have been getting good inflows in their equity schemes with investors remaining committed to their systematic investment plans (SIPs) — they invested a record Rs 24,500 crore through SIPs in September. Insurance companies, especially LIC which made a profit of Rs 15,500 crore from the stock market in the June quarter, a rise of 13.5 per cent when compared to the last year, are contrarians which buy when others sell and vice versa. The Corporation, the largest institutional investor, invested Rs 38,000 crore in the stock market in the June quarter and Rs 132,000 crore in the previous financial year.

“The trend of sustained FPI selling which started in early October continues and is showing no signs of reversal any time soon. The current wave of FPI selling was triggered by the Chinese stimulus measures and the cheap valuations of Chinese stocks. The elevated valuations in India made India the top choice of FIIs to sell,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

Sustained FPI selling impacted market sentiments pulling the Nifty down from the peak. “FPIs are likely to continue their selling in the near-term since the market sentiment has turned weak due to the escalation of tensions in the Middle East and the uncertainty regarding the outcome of the US presidential elections,” he said.

Inflows into small and mid-cap funds were to the tune of Rs 3,070.84 crore and Rs 3,130.42 crore, respectively in September.

Among equity mutual fund schemes, sectoral/thematic funds witnessed a slowdown in inflows at Rs 13,254.63 in September, compared to Rs 18,117.18 accumulated in August. Multi cap funds saw inflows of Rs 3,508.88 crore compared to Rs 2,475.06 crore in the previous month.

“Sectoral and thematic funds remain popular, although inflows have moderated. Mid-cap, small-cap, flexi-cap, and multi-cap funds continue to attract strong interest, with multi-cap funds emerging as a new favourite among investors. Large-cap funds were the only category to witness relatively muted inflows. This trend reflects ongoing investor confidence across diverse segments of the equity market,” said Pankaj Shrestha, head – Investment Services, PL Capital – Prabhudas Lilladher.

Meanwhile, Indian equity markets experienced a significant rally during Samvat 2080, with the Nifty rising approximately 25 per cent despite FPI withdrawals. This growth was fueled by strong corporate earnings, improved GST collections, a revival in the capex cycle, favourable monsoon conditions, and high domestic demand. Additionally, liquidity inflows from mutual funds and positive global cues contributed to market resilience. Globally, US indices also posted gains of 27 per cent to 35 per cent during this period, reflecting a synchronised rally.

“The key growth drivers for the Indian equity markets include consistent corporate earnings growth, which has bolstered investor confidence, and a revival in capital expenditure, particularly in infrastructure, enhancing growth prospects,” said Vikas Gupta, CEO and chief investment strategist, OmniScience. High GST collections reflect strong consumption patterns and economic expansion, while a favourable monsoon has supported agricultural productivity and maintained rural demand. Additionally, India’s large domestic market continues to provide stability against global uncertainties, and positive liquidity inflows, especially from mutual funds, have supported market momentum, he said.

However, certain risks persist. Geopolitical concerns could disrupt global trade and investor sentiment, rising crude oil prices may increase inflation and affect the trade balance, and a global economic slowdown, particularly in the US and Europe, could impact Indian exports, Gupta said.