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FIIs infuse record Rs 1.51 lakh crore into Indian market since March lows

Aseem Thapliyal     January 18, 2021

Foreign institutional investors (FIIs) have infused Rs 1.51 lakh crore into Indian equity markets since they hit multi-year lows in March last year. On March 23, 2020, Sensex plunged to its four-year low, logging its highest losses ever after rising number of coronavirus cases in India and the resultant lockdown in a majority of states took a heavy toll on the financial markets.

Sensex crashed 3,934 points to 25,981 during the same session. Similarly, Nifty closed 1,135 points lower at 7,610. One of the major causes of the market crash was heavy FII outflows during the session. FIIs pulled out Rs 2,989.89 crore on March 23, signalling negative sentiment toward Indian market.

Since March 23, they withdrew Rs 14,573.55 crore in the same month. Overall, FIIs withdrew a record Rs 65,816 crore in March 2020, pulling down benchmark indices by a record margin. In March, Sensex lost 8,829 points or 23.05% and Nifty fell 2,604 points or 23.24%.

The negative trend continued in April too, though with a lesser magnitude. Foreign investors withdrew Rs 5,208.50 crore signalling that the equity market was not out of the woods yet. However, in May, the trend turned positive. FIIs infused Rs 13,419 crore into Indian equity market. The correction in the indices also narrowed with Sensex now losing just 1,293 points during the month.

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In the next month, Sensex gained 2,491 points to end at 34,915 signalling a broad-based recovery in equity markets. FIIs too poured in Rs 5,492. 95 crore in  June enthused by the prospects of profits amid a rebound in equity market.

FII inflows rose in the subsequent months barring September, when they withdrew Rs 11,410 crore from equity market.

In November 2020, FIIs logged the highest ever monthly fund infusion of Rs 65,317 crore. Subsequently, Sensex rallied a record 4,535 points during the same month. Sensex followed global markets, which rallied on hopes of additional Covid-19 stimulus and run-up to the presidential election in the United States.

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Weakness in the dollar index and strong corporate earnings at home also raised sentiment on Dalal Street. Global markets were also buoyed by hopes of a successful coronavirus vaccine, which boosted expectations of a swift reopening of the global economy.

Subsequently, FIIs poured in a record Rs 1.13 lakh crore in last two months of 2020, equalling the highest ever inflows in 2013. In 2020, FIIs infused Rs 65,246.26 crore into the Indian market. Till January 17,2021, they have pumped Rs 16,901 crore into equity market.

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