FII Action: FIIs purchased shares worth Rs 1,500 crore in February. Will the buying trend continue?

Foreign institutional investors (FIIs), who were net sellers of Rs 25,744 billion in January, poured in Rs 1,539 billion last month even as US bond yields on 10-year bonds were high at around 4.25%.

“FIIs may turn into sellers again in the coming days. However, aggressive selling is unlikely as selling will have no impact on markets that are at record highs. FIIs have to buy stocks they are currently selling at a higher price when the situation becomes favorable for FII buying. So, even if we sell in the future, the selling will likely slow down,” said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

In recent months, the increasing dominance of mutual funds, HNIs and retail investors has reduced the impact of FII actions on Dalal Street.

“FPIs are steadily increasing their debt purchases. They purchased debt worth Rs 2,2419 crore in February, in addition to the Rs 19,836 crore purchased in January. This steady trend of debt investment is likely to continue,” said Vijayakumar.

FIIs were net buyers worth Rs 380 billion on the first trading day of March, according to provisional market data.

Looking at the historical trend of FII and DII inflows in March, DIIs have been net sellers of stocks six times in the last 12 years. Meanwhile, FIIs recorded net purchases 10 times. Derivatives rollover data for the month of February shows that FIIs have reduced their net selling in index futures (-58.9k in current expiration vs. -108k in previous expiration). FIIs’ index futures long/short ratio improved from low levels, but they remained net short in index futures. A whole month.