Foreign institutional investors (FIIs) sold equities worth Rs 90,043.54 crore in financial year 2019-2020 against domestic institutional investors (DIIs) lending support to Indian indices by purchasing equities worth Rs 1,28,208.24 crore.
These institutional investors could not escape the coronavirus crisis which cast a shadow of gloom across global markets. With rising number of coronavirus cases across the world and global markets melting under the effect of economic contagion since the second half of February, investors withdrew funds from risk assets such as equities and parked them in safe haven assets such as gold.
In India too, jitters of upcoming recession were felt with FIIs withdrawing Rs 12,684 crore from equity market in February this year.
The incessant selling continued in the next month with FIIs pulling out Rs 65,816 crore which proved to be the worst sell-off ever for Indian markets.
The FII sell-off and adverse market conditions across the globe in March weakened sentiment on Indian benchmark indices which logged their biggest monthly losses ever.
While Sensex lost 8,829 points or 23.05%, Nifty fell 2,604 points or 23.24% in March. The losses could have been higher for Indian indices had DIIs not come to the rescue of Sensex and Nifty.DIIs purchased equities worth Rs 55,595 crore in March to minimise the impact of carnage on Indian indices. When FIIs were leaving Indian markets, DIIs such as LIC, public sector insurers and PSUs among others were infusing funds into equities to cap losses in Sensex and Nifty.
In last fiscal, FIIs remained buyers in 4 months, while DIIs remained sellers in 3 months. Interestingly, FIIs were net sellers in each of last three months and DIIs indulged in buying activity during the same period.