What are FII and DII? How do they affect the stock market?
FIIs (Foreign Institutional Investors) are like your favorite foreign relative who always receives gifts from abroad for two nights in your room when you are in India. DIIs (Domestic Institutional Investors) are like your Indian relatives who give you gifts made in India.
Remember when there was news of FIIs withdrawing their money from India recently and how it was being held responsible for the depreciating rupee? Or do you remember reading or hearing headlines that read “FII pumps in money and stocks rallied….”
So what are FII and DII and why do people like it when FIIs invest in our stock market? Also, why is the world falling apart when FIIs take their money out of the system?
What are FIIs? A lot of foreign institutions that have their registered offices outside India – like foreign banks, foreign mutual funds, foreign governments, foreign insurance companies, and many more, always want to grow their money by investing in some projects, companies or fast growing countries. ,
When a country (like India) grows and develops in terms of infrastructure and production and it seems to have immense growth potential, it attracts the attention of these FIIs. Since developing economies have greater potential to grow and deliver better returns than developed and mature economies, foreign institutions may decide to invest their foreign exchange in developing countries through stock exchanges. It helps foreign investors to give better returns after project completion and sometimes even get tax benefits on their investments.
In India, some of the largest and most popular Foreign Institutional Investors (FIIs) are:
Europacific Growth Fund Government of Singapore Abu Dhabi Investment Authority JP Morgan DSP BlackRock Franklin Templeton Investment Fund
Think of FIIs as close family friends or relatives who live abroad and bring gifts for you and your entire family when they visit India. They wish you well, encourage, and often give you better pocket money than your Indian relatives because they are awesome and can afford it, and don’t mind giving you more. You return the favor by sacrificing your room for their family and accommodating them in every possible way, every time they are here. They like you even more because they get a nice room to live in for free.
What are DII? India-based Domestic Institutional Investors or DIIs are institutions registered in India that invest in the Indian stock market. This includes Indian banks, mutual funds, Government of India investments, insurance companies, etc. Since they have large funds coming from a large number of country investors, they can usually invest large amounts in different companies and generate a huge impact on one. Company growth.
How do FII and DII affect the stock market? FIIs and DIIs usually constitute about 35% of India’s stock exchange activity and exercise a huge influence on the stock markets. When an FII or DII invests in a company, it usually gives confidence to a large number of retail and individual investors. FII investment also increases the foreign exchange reserves of the country which enables the government and RBI to conduct monetary operations.
How to find DII/FII investments in stocks?
Log on to this website: https://ticker.finology.in/ Let’s say you want to find shareholding in Tata Steel. Enter the name of the stock in the search engine. Click on “Shareholding”
4. Check “Share Holding Pattern”