Foreign institutional investors (FIIs) broke a dry spell by becoming net buyers this week, totaling Rs 3,386 crore, signaling a positive shift in overseas investor sentiment. This change was marked by a unique pattern, with FIIs increasing exposure on Monday, Wednesday, and Friday, culminating in a significant surge of Rs 4,859 crore on Friday, largely driven by passive fund realignments during the FTSE quarterly rebalancing, as per analysts.
On the other hand, domestic institutional investors (DIIs) continued to play a crucial role as the market’s strong foundation, recording a net buy of Rs 7,109 crore for the week based on provisional exchange data. “Interestingly, DIIs maintained a consistent buying streak throughout the trading sessions but strategically reduced activity on Friday to accommodate the influx of global capital,” noted Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking.
The recent FII activity indicates a positive shift in overseas investor sentiment following a period of sustained selling, providing a favorable signal for domestic equities, especially amidst improving global risk appetite and reduced geopolitical tensions. “Steady domestic buying has helped counter market volatility and laid a solid groundwork for the recent equity market recovery. Alongside the return of positive FII flows, the robust institutional involvement reflects growing confidence in the market and is expected to bolster sentiment in the short run,” stated Ponmudi R, CEO of Enrich Money.
Benchmark indices continued their upward trend for the second consecutive week, driven by optimism surrounding the US-Iran peace agreement, a drop in crude oil prices below $80, a strong rebound in the Indian Rupee, and positive global cues that collectively boosted investor interest during the week. Nifty commenced the week positively, reaching an intra-week high of 24,189 on Thursday before experiencing some profit booking on Friday, resulting in a slight decline from the weekly gains to close at 24,013, up by 1.7 percent.
The broader market outperformed, with the Nifty Midcap and small-cap indices closing higher by 2.9 percent and 3.2 percent, respectively. Overall, the easing geopolitical tensions, declining commodity prices, resilient domestic institutional participation, and improved global sentiment have contributed to the upward trajectory of Indian equities, according to analysts.
