Have the FIIs Lost their Way?
Summary
TLDRThe video discusses the Indian stock market's impressive 69% rise since mid-June 2022, with Nifty soaring to 25,791. Despite this, foreign institutional investors (FIIs) have been net sellers, losing out on significant gains. Domestic institutional investors, conversely, capitalized on market lows, purchasing heavily when FIIs sold off. The script questions FIIs' market timing, suggesting they've missed out on opportunities in sectors like infrastructure, defense, and energy transition, and ponders if they will now start making aggressive investment mistakes in the ongoing bull market.
Takeaways
- 📈 The Nifty 50 index has seen a significant rise of about 69% from mid-June 2022 to September 2024, reaching 25,791.
- 💹 Domestic institutional investors have been major buyers during market downturns, investing heavily when the market was at its lowest.
- 📉 Foreign institutional investors (FIIs) have been net sellers during the bull market, recording sales of about 1.82 lakh crores.
- 🌐 Global market pressures such as US inflation, China's post-covid recovery, and the Russia-Ukraine conflict have influenced FIIs' investment decisions.
- 🏦 Domestic institutional investors bought shares worth almost 47,000 CR in June 2022, which was the market bottom.
- 📊 FIIs have made poor investment calls at major market turns, selling at lows and missing out on significant gains.
- 💼 Despite their reputation, FIIs have shown a pattern of making mistakes, acting more like retail investors during market fluctuations.
- 🚀 Domestic institutional investors have consistently outperformed FIIs, capitalizing on market opportunities effectively.
- 💸 FIIs have been net sellers for an extended period, even during pre-election months and post-election, showing a lack of confidence in the Indian market.
- 🔄 The trend of FIIs' dominance in the Indian market has shifted, with mixed feelings of fear and respect emerging among investors.
Q & A
What was the performance of the Nifty index from mid-June 2022 to its peak in September 2024?
-The Nifty index soared about 69% from mid-June 2022 to hit 25791 in September 2024.
How much money did reckless derivatives traders lose in FY 24 according to the Securities Exchange Board of India?
-Reckless derivatives traders lost about 52,000 CR in FY 24.
What was the role of Foreign Institutional Investors (FIIs) during the bull market between June 2022 and September 2024?
-FIIs were net sellers during the bull market, recording net sales of about 1.82 lakh crores.
Who were the major buyers when FIIs were selling at the market bottom in June 2022?
-Domestic institutional investors were the major buyers, purchasing almost 47,000 CR in June 2022.
What was the behavior of FIIs during the market downturn in January 2023 after the Hindenburg Revelations about Adani stocks?
-FIIs sold shares worth over 41,000 CR in January 2023, while domestic institutional investors bought 33,000 CR.
How did FIIs perform collectively at major market turns between June 2022 and September 2024?
-FIIs collectively took surprisingly poor calls at almost all major market turns, often selling at the bottom and buying at the top.
What was the investment trend of Domestic Institutional Investors (DIIs) during the same period?
-DIIs were big buyers during the period, with net purchases of 70,000 CR when FIIs were selling in mid-2023.
How did FIIs behave in the pre-election months in terms of their investment in the Indian market?
-FIIs sold shares worth 1.26 lakh CR in the pre-election months, while DIIs made net purchases of over 2 lakh CR.
What was the mistake of omission made by FIIs during the bull market?
-FIIs failed to participate in the big run-up in better quality infrastructure, defense, and energy transition, and public sector companies.
What is the author's speculation about FIIs' future behavior in the market given the US Federal Reserve's rate cuts and Indian government's growth-oriented policies?
-The author speculates that FIIs may start making mistakes of commission, charging forcefully into a strong bull market.
What does the author suggest about the image of FIIs as cool and competent professionals?
-The author suggests that the image of FIIs as cool and competent professionals is often false, as they can make mistakes, especially during market euphoria.
Outlines
📈 Market Trends and Investor Behavior
The paragraph discusses the performance of the Nifty index, which has seen a significant rise of about 69% from mid-June 2022 to September 2024. It highlights that while various investor segments have profited from this bull market, reckless derivatives traders have suffered losses. The Securities Exchange Board of India reports that foreign institutional investors (FIIs) have been net sellers during this period, with net sales of approximately 1.82 lakh crores. The narrative points out that domestic institutional investors (DIIs) have been significant buyers, especially during market downturns. The paragraph also touches on how FIIs have historically made mistakes during market fluctuations, often mirroring retail investor behavior. It concludes by noting that despite the recent trend of FIIs being net sellers, the market has continued to rise, suggesting a potential shift in their investment strategies.
🌐 Global Influences and Market Dynamics
This paragraph delves into the influence of global factors on the Indian market, such as high valuations, US inflation, China's post-covid recovery, and geopolitical tensions like the Russia-Ukraine conflict. It discusses how these factors have affected commodity prices and shipping costs. The script also reflects on the historical dominance of FIIs in the Indian market and how their reputation has evolved over time. The speaker points out that professional investors, including FIIs, are not immune to market pressures and can make mistakes, often by following trends rather than conducting thorough research. The paragraph concludes with speculation on whether the recent changes in US Federal Reserve policies and Indian government initiatives might lead FIIs to alter their investment strategies and potentially make more aggressive moves in the market.
Mindmap
Keywords
💡Nifty
💡Derivatives Traders
💡Foreign Institutional Investors (FIIs)
💡Domestic Institutional Investors (DIIs)
💡Bull Market
💡Panic Sales
💡Hindenburg Revelations
💡Momentum Investing
💡Real Estate and Infrastructure Companies
💡Public Sector Companies
💡US Federal Reserve
Highlights
The Nifty index has surged about 69% from its bottom in June 2022 to September 2024.
Despite a bull market, Foreign Institutional Investors (FIIs) were net sellers during this period, offloading about ₹1.82 lakh crores.
In June 2022, FIIs sold ₹58,000 crore at the exact market bottom, marking the biggest monthly sale during the downturn.
Domestic Institutional Investors (DIIs) purchased nearly ₹47,000 crore in June 2022, capitalizing on the market bottom.
DIIs consistently bought during FIIs’ selling, with January 2023 seeing DIIs buying ₹33,000 crore while FIIs sold ₹41,000 crore.
The Hindenburg revelations about Adani stocks caused a mini crash, but DIIs turned it into a buying opportunity.
Between January and May 2024, FIIs remained net sellers, barring March when they made a timid net purchase of ₹3,300 crore.
In the pre-election months, FIIs sold ₹1.26 lakh crore, while DIIs bought over ₹2 lakh crore.
Despite the general election results, the market continued to rise, showing that DIIs' bullish strategy paid off.
Over the last 29 months, DIIs were significant buyers while FIIs were net sellers during a strong bull market.
Historically, FIIs were revered for their superior investment decisions, but their dominance is now questioned.
FIIs made mistakes by committing to poorly governed companies in past bull markets, such as in 1994 and 1999.
For the first time, FIIs made mistakes of omission by not participating in profitable sectors like defense, energy transition, and infrastructure.
FIIs have swum against the rising tide for a long period (29 months), missing out on key market gains.
With the U.S. Federal Reserve cutting rates and India's growth-oriented policies, the question arises if FIIs will re-enter the bull market with force.
Transcripts
[Music]
hello and welcome to Money life News and
Views I'm devashish Bas from the market
bottom of
15,183 or so in mid June
2022 The Benchmark index which is Nifty
has soared about 69% to hit
25791 that was last week in the 18
months alone Nifty has surged
52% all investor segments individual
investors mutual funds other domestic
institutional investors seem to have
made good money from this bull market
except of course Reckless derivatives
Traders and this lot has lost about
52,000 CR in FY 24 alone according to a
study by Securities Exchange Board of
inel what about foreign institutional
investors surely with their Superior
knowledge long years of experience and
deep research and large funds at their
disposal they should have reaped the
largest benefits from this full
Market well here are some shocking
overall numbers about the investment
Trends between June 2022 bottom and 20th
September 24 last that's last week fiis
were massive net sellers during a b bu
Market yes you heard that right the
recorded net sales of about 1.82 lakh
crores the biggest monthly sales coming
exactly in June
22 at the exact bottom of a short
depressed period between November 21 and
June
22 even at those low valuation Panic
sales by fiis of over 58,000 CR in that
month remains
unsurpassed they pressed huge sales at
the bottom of the
market Indian and Global markets were
were under pressure at that time that's
from almost late 2021 due to a variety
of factors High valuation sharp rise in
US inflation weak postco recovery in
China and of course Russian invasion of
UK Ukraine which pushed up all commodity
prices and shipping freight costs and so
on now who did the FIS sell to in those
dark days of June
22 well to domestic institutional
investors who were huge buyers of almost
47,000 CR that month at as I said what
turned out to be the market bottom
surprisingly this trend was repeated
with boring regularity thereafter take
take for instance January 23 when
Hindenburg Revelations about adani stock
adani stocks shook the market the mini
crash was an opportunity for for the
domestic institution investors to buy
and they borrow 33,000 CR that month
while panicky fi sold shares worth over
41,000 CR of course even sa investors
sometimes get it wrong but FIS
collectively took surprisingly poor
calls at almost all M Major Market turns
now here I must say that all my numbers
are fundamentally based on the The Daily
cash sales that's that are reported some
of these numbers are subsequently
changed or SEI has different set of
numbers from what is initially reported
and so my figures may be slightly
different from what you read elsewhere
now to go back to what I was saying
while FIS did invest strongly between
May and July 23 the earliest stage the
earliest stage of of the current ongoing
bull market they quickly turned beish
over the next 3 months pressing net
sales of 76,000 CR which were as I said
with boring regularity lapt up by diis
that is domestic in institutional
investors their net purchases those
three months when fi were selling in mid
23 was 70,000 CR and so when the market
took off in mid November it was the diis
who gained handsomely with fiis looking
rather
foolish undeterred by this experience fi
remain net sellers every month between
January and May 24 baring March when
they had net and that to a very timid
net purchase of just about 3,300
CR what happened in the pre-election
months well they sold shares worth 1.26
lakh CR while diis met nit purchases of
over 2 lakh CR their fires were over
cautious the diis were probably Reckless
and we're buying we don't know well that
call went wrong again for f
the market fell on the day of the
general election results and continued
to March higher surprisingly even in the
first four months after the election fi
only made a small amount of net
purchases and pressed over 20,000 CR of
sales in August however they have been
net buy so far in September now all
these figures may be influenced in a
small Way by large bulk deals where one
side of the transaction is not in I or
di the trend is very clear over the last
29 months of a strong bull market
domestic institutions investors were big
buyers and foreign institutional
investors were poor were probably net
sellers we don't know the what the
actual final figures are but they are
probably net
sellers how times change at one time the
dominance of fiis in the Indian market
was so complete that the late R Revy
moan who was then manag maning director
of chrysle had said the reverance for
fiis had now metamorphosed into mixed
feelings of fear and all what is
surprising though is not that the FI has
got it wrong professional investors do
get it wrong often their image of being
cool competent professionals who remain
calm during Market Euphoria and wait to
BU a fair value after deep research and
exhaused exhaustive diligence is often
false but the mistakes are almost most
always acts of commission not usually
acts of omission how does that work in a
strong bll Market the chased the flavor
of the day and act like retail investors
in 1994 they had loaded up on global
issues of asset heavy poorly governed
Indian companies in the bull market of
1999 they're frantically charged into
Shady software companies either based on
imitation or rumors or joint positions
with speculators and other fund or in
expectation of a price run up before
overseas Equity offerings the flight to
irrationality exactly what we saw in
9395 LED them to create exposure of
almost 60 to 80% in technology media and
telecom companies at of huge
valuations what happened next in the
crazy bull market of 20058 they were
overc committed to another set of hot
flavor of the month ideas which is real
estate and infrastructure companies
earning very poor Returns on on Capital
but now for the first time fiis have
made mistakes of omission not commission
they failed to participate in the big
runup in better quality infrastructure
companies defense and energy transition
and public sector companies many of
which have reported vastly improved
performances I have no idea why this is
happened after all professional
investing is a competitive business and
performance is benchmarked every month
mon consequently even institutional
investors cannot remain immune to buying
what is working or what is popularly
known as momentum Investing For The
First Time in 30 years I notice fii is
choosing to swim against a rising tide
and that for a very long period 29
months
now the question is now that the US
Federal Reserve has started cutting
rates and Indian government's growth
oriented policies seem to be continuing
will they find has now start started
start making mistakes of commission that
is charge forcefully into a strong bull
market we'll wait and see what happens
thanks for watching and if you did like
it please share and do subscribe thank
you
[Music]
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