Foreign investors driving Nifty rally

Foreign institutional investors have been the driving force behind the Nifty’s 8.8 per cent or 935-point rally from February 19’s low of 10,585.65 through 11,521.05 on March 20.

In the calendar year through March 19, they have purchased shares worth Rs 35,313 crore and equity derivatives worth Rs 36,164 crore. In calendar year 2018, they were equity sellers to the tune of Rs 33,014 crore.

Domestic institutional investors, on the other hand, have sold shares worth Rs 10,175 crore in the calendar year through March 19.

But what increases the odds of the rally continuing is the fact that FIIs are also tanking up on index futures – apart from buying in the cash segment — in the run-up to the polls, the outcome of which will be known on May 23.

As of March 19, they were net purchasers of index futures of a cumulative 92,992 contracts, the highest since January 29 last year when they were cumulative net buyers of 105,170 index contracts.

The net sellers of index contracts and have been clients (corporates, HNIs and ultra HNIs), followed by proprietary brokers and DIIs.

“They (FIIs) are generally upbeat on emerging markets. In the Indian context, they believe that the benefits of IBC and GST will become evident in the next five years and last but not least, the base case is that the NDA would form the next government,” said UR Bhat, director, Dalton Capital Advisors, an FII advisory.

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