Investments by domestic institutional investors (DIIs) in the Indian stock market have crossed the ₹2 trillion mark, so far in 2022. With still six-and-a-half months to go in the year 2022, investments by DIIs in the equity market are the highest ever in a single calendar year, Moneycontrol reported.
Analysts say that investors have been taking advantage of the correction in the market, that have been feeling the jitters over rising inflation, surging crude oil prices, and geopolitical tensions.
Further, DIIs have been net buyers (they bought more equities than they sold) for 16 consecutive months even as foreign institutional investors (FIIs) have been net sellers.
FIIs have sold $23.87 billion in domestic equities so far this year, as rising crude prices fuel concerns about rising inflation and the fiscal deficit.
The Sensex and Nifty have both fallen nearly 9.2 per cent this year. The US Federal Reserve will meet on Wednesday when it is expected to continue raising rates amid higher inflation, while the Bank of Japan will conclude its two-day meeting on Friday.
According to an Economic Times report, large mutual funds bought shares of lenders, automobile makers, and select IT companies in May as they stuck to beaten-down stocks amid uncertainty over the near-term market outlook.
Meanwhile, Indian households save about ₹53 trillion annually, and at the current rate of equity allocation in household savings (4.80 per cent), the incremental annual equity allocation works out to ₹2.52 trillion. Of this, the annual contribution through SIPs in mutual funds alone stands at over ₹1.44 trillion, according to a Jefferies India report.
The number of SIP folios increased from 5.27 crore in March 2022 to 5.39 crore in April 2022.
In addition, approximately ₹25,000-30,000 crore is being invested in equity markets by the Employees’ Provident Fund Organisation (EPFO) as part of its 15 per cent allocation to equity markets. A recent news report suggested that the government is now proposing to gradually increase the allocation by EPFO to 20 per cent. If this proposal goes through, it would mean more money flowing into Indian equity markets.