Welcome to Indian Share Market
Today's Buying and Selling Activity of FII (Foreign Institutional Investors) and DII (Domestic Institutional Investors) on NSE and BSE
Source - National Stock Exchange
What is the meaning of FII and DII in Indian stock market and Buying and Selling activity for todays trading session
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What is FII and who are they?
FII stands for Foreign Institutional Investors and they are also called as FPI (Foreign Portfolio Investor).
A foreign institutional investor (FII) is an investor or investment fund registered out of India. Institutional investors most notably include hedge funds, insurance companies, pension funds and mutual funds.
The term is used most commonly in India and refers to outside companies investing in the financial markets of India.
FII in India
Countries with the highest volume of foreign institutional investments are those that have developing economies. These types of economies provide investors with higher growth potential than in mature economies. This is why these investors are most commonly found in India, all of which must register with the Securities and Exchange Board of India (SEBI) to participate in the market. Currently Market regulator SEBI has over 1450 foreign institutional investors registered with it - to view the detail list please visit SEBI site
Regulations for Investing in Indian Companies
All FIIs are allowed to invest in India's primary and secondary capital markets only through the country's portfolio investment scheme (PIS). This scheme allows FIIs to purchase shares and debentures of Indian companies on the normal public exchanges in India.
However, there are many regulations included in the scheme. There is a ceiling for all FIIs that states the max investment amount can only be 24% of the paid-up capital of the Indian company receiving the investment. The max investment can be increased above 24% through board approval and the passing of a special resolution. The ceiling is reduced to 20% of the paid-up capital for investments in public sector banks.
The Reserve Bank of India monitors daily compliance with these ceilings for all foreign institutional investments. It checks compliance by implementing cutoff points 2% below the max investment amounts. This gives it a chance to caution the Indian company receiving the investment before allowing the final 2% to be invested.
What is DII and who are they?
DII stands for Domestic institutional investors. Domestic institutional investors are those institutional investors which undertake investment in securities and other financial assets of the country they are based in.
Institutional investment is defined to be the investment done by institutions or organizations such as banks, insurance companies, mutual fund houses, etc in the financial or real assets of a country. Simply stated, domestic institutional investors use pooled funds to trade in securities and assets of their country.
These investment decisions are influenced by various domestic economic as well as political trends. In addition to the foreign institutional investors, the domestic institutional investors also affect the net investment flows into the economy.
Impact of FII investment in Indian stock market
Foreign institutional investors play a very important role in any economy. These are the big companies such as investment banks, mutual funds etc, who invest considerable amount of money in the Indian markets. With the buying of securities by these big players, markets trend to move upward and vice-versa. They have strong influence on the total inflows coming into the economy.