The net FII selling for the year crossed ₹40,000 crores on Friday. The persistent selling by FII’s has not led to any significant correction in our markets. Evidently, the selling is getting absorbed and the markets are showing strength due to robust retail participation.
When new investors enter markets in such large numbers and have a good experience in their early phase, they believe more in the asset class and take greater interest. The asset class gets greater wallet share and various product categories attract fresh capital continuously.
Equity is clearly having a party. The inflows into equity mutual funds, AIF’s, IPO’s, and smallcase products clearly show a strong domestic undercurrent in favour of equity over other asset classes. This trend seems to be driven by a lack of alternative choices and significantly higher liquidity across global markets.
Consumption is high. Investment flows are sustaining. Tech spends are rising. Digital industries are seeing lifetime high capital allocations. Clearly, the macros are driving the markets. A dramatic change to the macros can change this. Until then, we will see strong sentiment in our markets, robust flows into equity, a steady pipeline of IPO’s, and all-time high disinvestment activity.
The trend is clearly the investor’s friend right now.
