Foreign institutional investors (FIIs) continue to extend their selling streak on the Indian stock market, driven by persistent concerns over US interest rates and China‘s economic health. The session on Tuesday, August 22, saw domestic institutional investors (DIIs) as net buyers once again, injecting some stability amidst the ongoing turbulence. The cumulative data for FIIs and DIIs highlight the complex interplay of global factors impacting market sentiment.
FIIs and DIIs Activity
As per data from the National Stock Exchange (NSE), FIIs collectively purchased ₹8,854.08 crore worth of Indian equities. However, they also sold shares valued at ₹9,349.25 crore, resulting in a net outflow of ₹495.17 crore. In contrast, DIIs invested ₹6,027.22 crore and divested shares worth ₹5,493.47 crore, registering a net inflow of ₹533.75 crore.
Factors Influencing FIIs Selling
The primary factors driving FIIs’ selling activity can be attributed to several global dynamics. Higher US bond yields and a stronger US dollar against other major currencies have caused uncertainty in global financial markets. Moreover, the potential for interest rate hikes by the US Federal Reserve has also prompted FIIs to withdraw funds from the Indian market. Despite the consistent buying activity by DIIs, their efforts have been insufficient to counteract the market volatility resulting from these global headwinds.
US 10-Year Yield and Dollar Index
One significant indicator of the global economic landscape is the US 10-year yield, which is currently trading at a 16-year high. This high yield reflects concerns about inflation and the future path of interest rates. Similarly, the US dollar index has surged above 103, indicating the dollar’s strength compared to other major currencies.
Indian Equity Valuation and Funds Flow
While the market continues to grapple with external pressures, the valuation of Indian equities remains a noteworthy consideration. Although Indian equities are not considered cheap, they are supported by the flow of funds into the market. The investment landscape is complex, as both domestic and international factors interact to shape market performance.
The ongoing selling streak by FIIs underscores the impact of global concerns on the Indian stock market. Despite the efforts of DIIs to stabilize the situation, the market remains susceptible to fluctuations driven by factors beyond domestic borders. As the dynamics of global economics evolve, investors and market participants will closely monitor indicators like US bond yields, the dollar index, and central bank policy decisions to navigate the complexities of today’s financial landscape.
Disclaimer: The information provided here is for educational purposes only and should not be considered financial advice. Always conduct thorough research and consider consulting a financial professional before engaging in algorithmic trading.