Foreign Institutional Investors vs Domestic Institutional Investors

What's FII?

"Foreign Institution Investor" stands for "foreign investment fund". It refers to an investor or investment fund that invests in assets of a country, while being headquartered elsewhere. This term is commonly used in India to describe outside entities that contribute to the country's financial market by investing. On the other side, 'DIIs' refers to 'domestic institution investors'. They invest in securities and financial assets of the country where they reside.

Both FIIs as well as DIIs have to consider economic and political trends when making investment decisions. Both domestic and foreign institutional investors (FIIs), can have an impact on the economy's net investments flows.

Types FIIs

There is not much to distinguish between DII and FII with regard to their types. The only thing that is different is where the entity is headquartered. There are four sets of Indian institutional investors. These include Indian mutual funds, Indian pension schemes, Indian insurance companies, banks, or financial institutions. However, FIIs in India can include mutual funds, hedge funds, pension funds and international insurance companies.

The Influence of DII S

India's FIIs and DII are different in terms of influence. This is due to the current economic situation. The performance of India's stock market is largely determined by domestic institutional investors. This is especially true when foreign institutional investors play an important role as a driver of capital. India has put restrictions on the assets that foreign institutional investors can purchase as well as the number and types of equity shares that they can purchase within one company. This is done to limit the impact that FIIs have on companies and the country's financial markets. This limit is also intended to protect India's financial markets from potential damage. It ensures that India's economy doesn't suffer if FIIs flee in masse.

lers. The cumulative investment of DIIs in India's equity market was Rs55,595 million as of March 2020. This was a record-breaking investment by the country in a single month.

FII Comparative Analysis for 2020

1. Asset under Management (AUM)

As of April 2020, foreign institutional investor had approximately Rs24.4 lakh crores under their assets, while domestic institutional investors had Rs20.4 lakh crores. FIIs experienced a drop of more than twice that of DIIs, with an average 10% decrease in their AUM since January 2020.

2. Equity Holdings

The equity holdings of domestic institutional investor reached almost one-third the capitalization of the BSE 500 index. Domestic institutional investors increased their stakes in 106 Indian companies by 1 percent in the March 2020 quarter. They also reduced stakes in 42 Indian companies on the BSE 500 index. Coal India and ONGC are the most notable companies in which domestic institutional investors increased their stakes.

Foreign institutional investors' equity holdings fell by 0.70%, to 21.5%, on the BSE 500 index. This index has the largest market capitalization. In the Match quarter 2020, it was also observed that 27 Indian companies were sold by foreign institutional investors to India's Nifty 50.

3. Ownership Ratio of FII vs DII

The FII vs DII owner ratio' is the sum of the total FII equity divided by the total DII assets over a given period. This ratio has not fallen to 1.2 since April 2015 when it reached its highest point. Investors believe that the drop in DII vs FII was due to a combination of two factors.

- Rapid and rapid growth of DIIs in Indian equities

FIIs are selling off their fresh inflows at a much heavier rate.

The current DII vs FII owner ratio reflects the strength of DIIs' investment compared to FIIs.

4. Inflows/Outflows Year to Date

DIIs have invested approximately Rs72,000 crores in India since January 2020. Indian equity markets have been robbed by foreign institutional investors of Rs39,000 crores over the past year.


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