Finance minister Nirmala Sitharaman said that retail investors have saved the Indian market from wild swings due to the outflow of funds by foreign investors, reported Mint.
Foreign institutional investors (FIIs) and foreign portfolio investments (FPIs) may come and go but Indian retail investors have proven that any shock that may come because of these flows is now taken care of because of the shock-absorbing capacity that retail investors have brought to the market, Sitharaman said, as quoted by Mint. “I think we as a House should stand up and appreciate the Indian retail investor who has invested a lot of confidence in the stock market today in India," the minister said.
Inflows from foreign portfolio investors and foreign institutional investors depend on interest rates, and they can be tempted by interest rates and prospects elsewhere, she said in the Lok Sabha on Monday. The test was whether foreign direct investment (FDI) inflows continue even during instances such as the covid pandemic, as this indicates if the money coming in is staying invested in this country and is creating jobs, Mint quoted Sitharaman saying so.
If the inflow of FDI remains unabated, and India is the highest receiver of FDI since before Covid and it continues significantly even during covid and subsequently also, that indicates that the money coming in is staying invested in this country, thereby creating jobs and prospects for us, and not FIIs and FPIs, the minister said as per the report.
As highlighted by brokerage firm Motilal Oswal Financial Services, domestic institutional investor (DII) flows into equities in FY22 were the highest ever at $26.8b against the outflows of $18.4b in FY21, while FIIs witnessed equity outflows of $17.1b after five consecutive years of inflows.
Despite the heavy outflow by FIIs, the Indian market clocked the second-best returns in the last seven years.
In FY22, the Nifty recorded an impressive 19 percent year-on-year (YoY) gain despite challenges on multiple fronts. The Nifty Midcap 100 (up 25 percent YoY) and Nifty Smallcap 100 (up 29 percent YoY) outperformed the benchmark.
Top gainers in the sectoral space were Utilities (up 63 percent), Metals (up 62 percent), Media (up 54 percent), Oil & Gas (up 42 percent), Telecom (up 42 percent), and Technology (up 40 percent). While Private Banks, Consumer, Autos, and Healthcare underperformed.
The number of BSE-registered investors has jumped more than 57 percent in the last one year, data from BSE showed.
