FIIs on a buying spree for three days: Analyst decodes renewed interest 

Decoding the likely reason for renewed FII interest in Indian equities, VK Vijayakumar, Chief Investment Strategist, Geojit Investments said, “A significant feature of recent stock market trends in countries like the U.S. and South Korea has been the unusually huge volatility in stock price movements. Tech stocks are witnessing huge volatility in response to quarterly results, expectations and unprecedented speculative trading. In South Korea, particularly, volatility is excessive. Two stocks in Kospi – Samsung and SK Hynix – which account for 52% of Kospi’s market capitalisation have been moving up and down sharply. In early trade this morning Kospi is up by 16% driven by 25% spike in Samsung and 21% spike in SK Hynix.

Double digit up moves and down moves at the index level are very rare. But this is happening now in South Korea, that too frequently. Institutional investors don’t like this  kind of huge volatility which might impact their performance. This may be one reason why FIIs have turned buyers in India in recent days.”

According to a MOFSL study, foreign institutional investors (FIIs) have continued to reduce their exposure to Indian equities, weighed down by geopolitical tensions, slowing earnings momentum and relatively expensive market valuations.

Since the market’s peak in September 2024, overseas investors have withdrawn nearly $58 billion from Indian stocks in 22 months. Despite the sustained foreign selling, domestic institutional investors (DIIs) have more than offset the outflows, investing a record $166 billion during the same period.

The resilience of the Indian market has also been supported by strong retail participation. Monthly inflows through systematic investment plans (SIPs) have remained robust at around $3 billion, providing a steady stream of domestic liquidity and helping cushion the impact of FII outflows.