As foreign funds flee amid uncertainty, domestic investors seize the Nifty dip

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Subscribe to enjoy similar stories. After a year of stellar returns, the Nifty 50’s \momentum appears to be losing steam, with gains tapering off over the past week. Even so, investors seem to be buying the dip, particularly domestic institutional investors.

On Monday, as the benchmark Nifty 50 fell nearly 2%, DIIs stepped in with net purchases of ₹2,936 crore, while foreign institutional investors sold ₹4,330 crore in Indian equities. Similarly, on Tuesday, DIIs purchased ₹3,031 crore of Indian equities while FIIs net sold ₹2,569 crore. The MSCI India Index has pulled back by around 9% from its peak on 27 September, while the Nifty mid- and small-cap indices have corrected by about 7% and 5%, respectively.

“This market dip has opened stock-specific opportunities, as about 40% of the top 200 stocks are down by around 20%," said India Rewind, a monthly update by DSP Asset Managers. “While the current week’s market activity may reflect some uncertainty surrounding the US election, any declines are likely to prompt DII buying rather than sell-offs," said Koushik Mohan, lead analyst at financial services firm Ashika Group. Mohan does not see a significant impact from profit-booking at this stage.

Also read | Record FII exodus shakes India’s stock markets even as domestic funds step up Over the years, the landscape of market participants has undergone a remarkable transformation. The dominance of FIIs characterized the 1990s, the 2000s saw ultra-high-net-worth investors taking charge, and the rise of high-net-worth individuals marked the 2010s. In the 2020s, the market has become the realm of retail investors and DIIs, say market experts.