Why are FPIs buying and DIIs selling Indian stocks? Will the trend continue? Here's what experts say

livemint.com:

Foreign portfolio investors (FPIs) have bought Indian shares worth almost ₹1 lakh crore so far this year, giving a boost to the Indian market. Strong foreign capital inflow has been a major reason for the recent strong performance of the Indian stock market. While foreign investors have been bullish on Indian stocks, domestic institutional investors (DIIs) have been selling off Indian equities this month.

This indicates that local investors are not as optimistic about the Indian market as foreign investors are at the current juncture. DIIs had been buying stocks in the first three months of the year, but they have become more cautious recently as the market has been reaching new record highs. FPIs have many reasons to be positive about Indian stocks.

Let's understand them one by one. Foreign investors (FPIs) eagerly bought stocks in emerging markets, including India, because they believed that the US Federal Reserve would stop raising interest rates. In April, the Reserve Bank of India (RBI) had already decided to pause rate hikes, which made investors optimistic.

In June, the US Federal Reserve also decided to pause rate hikes, confirming market expectations. FPIs didn't want to miss the chance to invest in the growing Indian market, so they jumped in to take advantage of the situation. The biggest reason behind FPIs' optimism about the Indian market is the robust outlook of the Indian economy when the global economic outlook is gloomy.