Despite a wave of selling by foreign institutional investors (FIIs), retail investors have stepped up their buying, helping the Indian market stay strong. This domestic buying has allowed the Nifty index to perform better than its Asian counterparts like Japan’s Nikkei 225, South Korea’s Kospi, and Singapore’s Straits Times Index, which have been struggling due to global uncertainties.
Domestic Buying Surge
From the beginning of August until the 9th, FIIs sold shares worth ₹13,431 crore, but domestic mutual funds bought ₹13,855 crore worth of shares. Companies, trusts, and other financial institutions also sold shares, totaling ₹4,827 crore. However, it was retail and high-net-worth individual (HNI) investors who made a significant impact, buying ₹10,599 crore worth of shares.
Together with mutual funds, domestic investors injected ₹24,030 crore into the market, counterbalancing the selling pressure from FIIs and others. This strong domestic inflow helped limit the Nifty’s drop to just 2.57% from its recent high.
Outperformance Compared to Asian Peers
While Asian markets like the Nikkei 225, Kospi, and Straits Times Index fell by 10.4%, 6.81%, and 4.62% respectively, due to recession fears and currency issues, the Nifty held up better thanks to domestic support.
Rise of Savvy Retail Investors
Retail and HNI investors have become more strategic and informed in their investments since the pandemic. R Venkataraman from IIFL Securities noted that this group now makes more educated decisions compared to earlier times when investing was more about luck.
From April 1 to August 9 this year, direct retail buying on the NSE totaled ₹50,566 crore, surpassing previous records. This smart investment behavior has been evident in their ability to buy during market dips and sell during peaks.
Continued Strong Domestic Interest
The surge in domestic buying has been crucial in maintaining market stability. As retail and HNI investors become more knowledgeable, their influence on the market continues to grow.
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