In March 2024, Foreign Institutional Investor (FII) pumped up massively $3.63 billion In Indian equities, their biggest buying spree since December 2023. This made India the top destination for foreign funds in Asian markets.
Domestic institutions join the buying frenzy
Domestic institutional investors remained net buyerA surprising investment Rs 52,467 crore In the Indian market, at the highest level in four years.
Other Asian markets saw mixed inflows
Outside India, FIIs invested in markets like South Korea ($2.91 billion), taiwan ($1.14 billion), and Indonesia ($585 million). However, they withdrew the money Japan ($5.35 billion outflow), Thailand ($1.13 billion), malaysia ($514 million), vietnam ($197 million), and philippines ($40 million).
Factors behind inflows
According to Deepak Jasani, head of retail research at HDFC Securities, net FII inflows were driven by Block deals, index rebalancingand opportunity to buy undervalued stocks After market improvement. For domestic institutions, cash reserves And year end status Shopping promoted.
Major block deals and market corrections
March saw significant block deals, including BAT Plc is selling its stake in ITC, Rakesh Gangwal is disinvesting in InterGlobe Aviation, Tata Sons is selling shares of TCSAnd Singtel is reducing its stake in Bharti Airtel,
benchmark index Sensex and Nifty There was a loss of 0.1% each, while BSE Midcap and Smallcap Indices declined by 0.7% and 5.53% respectively due to factors such as ED raided, SEBI’s warning, liquidity stress testAnd Fear of RBI intervention,
Impact on market liquidity and valuation
Analysts noted that Liquidity is gone Following the recent actions by RBI and enforcement agencies, market players and leveraged HNIs are being impacted. NBFCs are Revaluation of loan against sharesReducing overdraft facilities for HNIs and triggering forced liquidation of positions.
However, mutual fund sip flow It is expected to remain stable, and the attractive valuation may attract investors waiting on the sidelines. Stocks linked to questionable institutions may take longer to recover, while fundamentally stronger stocks may bounce back faster.
Bullish outlook for mid- and small-caps
Brokerage Nuvama Research has suggested an uptrend in mid- and small-cap stocks following the recent correction, with the current phase being seen as a correction within the ongoing bull market. They recommend long positions citing oversold conditions, strong global market tailwinds, upcoming earnings season and general elections as favorable risk premiums.
