October saw an unprecedented infusion of over Rs 1 lakh crore into Indian equities by domestic institutional investors (DIIs), setting a new monthly record. This significant infusion came in response to heavy selling pressure from foreign institutional investors (FIIs), who sold equities worth Rs 102,931 crore till October 24. DIIs have cumulatively invested Rs 4.41 lakh crore in 2023, with more expected by the end of the year. Because mutual fund-driven retail participation continues to grow.
Drivers of DII investment growth
The record-breaking DII inflows have resulted from consistent contributions through systematic investment plans (SIPs). Together Insurance and retirement funds according to market experts. The investment is seen as part of a broader change in retail investor behavior, with more individuals participating in the market through mutual funds. The previous DII investment record of Rs 56,356 crore in March has now been surpassed, underscoring the strength of the trend.
Challenges from FII outflows
Foreign portfolio investors (FPIs) are expected to maintain their selling stance in the short term. Tension in the Middle East and uncertainties regarding the US presidential election have weakened market sentiment. This trend was followed by FIIs selling equities worth Rs 4,613 crore on October 30, which was slightly offset by DIIs’ buying of Rs 4,518 crore on the same day.
Strong domestic macros boost market sentiment
Domestic economic indicators have been giving optimism to the Indian market. Strong Purchasing Managers Index (PMI) data and the Reserve Bank of India’s (RBI) promising economic growth forecast for FY2025 suggest resilience and recovery in the economy. With the manufacturing sector showing signs of revival, experts believe this may encourage investors to invest in quality stocks, further boosting the health of the stock market.
Stock-Specific Market Trends
A notable trend in October’s market activity was stock-specific volatility. Better-than-expected results led to a sharp rise, with shares rising as much as 20% in a single day, while poor results saw a correction of about 15%. Experts suggest that this trend highlights a shift towards stock-specific analysis rather than focusing solely on benchmark indices, indicating a more astute investor approach amid market volatility.
