Indian Stock Market Update: DIIs Step Up as FPIs Pull Back in August
Mumbai’s stock market saw some ups and downs in August, but domestic institutional investors (DIIs) came to the rescue. They bought Indian equities worth Rs 94,829 crore ($10.8 billion), marking their 25th straight month of net inflows. This was the biggest DII buying spree in the last 10 months, according to the latest NSE Market Pulse report.
On the flip side, foreign portfolio investors (FPIs) turned sellers, offloading stocks and causing net outflows of $4 billion—the highest FPI selling in seven months. This FPI selling pressure, combined with worries over aggressive US tariffs, triggered a broader sell-off in the Indian equity market.
Despite the turbulence, there are bright spots in India’s economy. The government is tightening its fiscal deficit while keeping monthly GST collections strong. Capital expenditure is rising too, signaling a push for long-term growth. Inflation has dropped to its lowest level in over eight years, staying below the Reserve Bank of India’s (RBI) target. Experts say the RBI will keep watching data closely before deciding on interest rates.
Corporate earnings bounced back in the first quarter of the fiscal year, though overall estimates got some downgrades. The good news? The energy sector stood out with upgrades that balanced out cuts in areas like consumer discretionary, materials, and financials.
Listed companies, even though they’re fewer than unlisted ones, pay a huge chunk of corporate taxes—and this has grown in line with India’s GDP. Fundraising picked up with more new equity listings in August, but debt raising hit a 16-month low. Investor registrations slowed a bit, but the total base is closing in on 12 crore.
Trading in the derivatives market stayed picky. Interest rate futures saw a big jump in daily turnover, while equity options dipped in open interest. Commodity futures reached a record high, thanks mostly to electricity contracts.
India’s external finances look solid, with forex reserves hovering around $700 billion in August and the rupee’s volatility under control. Monsoon rains gained steam, reservoir levels are healthy, and sowing is almost done. Cumulative rainfall from June 1 to September 5 was 8.8% above normal—great news for agriculture and the economy.
Overall, while FPI outflows shook things up, strong DII support and positive economic signs kept the Indian stock market resilient. Keep an eye on RBI moves and global tariffs for what’s next.
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