FIIs (Foreign Institutional Investors) are like your favorite foreign relative who always gets you gifts from abroad in exchange for two nights in your room when they stay in India. DIIs (Domestic Institutional Investors) are like your Indian relatives who get you gifts that are made in India.
Remember when recently there was news about FIIs taking out their money from India and how this was being blamed for the falling value of the rupee? Or do you remember reading or listening to headlines that sound like "FII pumped in money and stocks rallied at ....''
Advertisem*nt
So what are FIIs and DIIs and why do people love it when FIIs pump money into our stock market?Also,why does the world look like it's falling apart when FIIs take their money out of the system?
Whatare FIIs? A lot of foreign institutions that have registered offices outside India - likeforeign banks, foreign mutual funds, foreign governments, foreign insurance companies, and much more, always look to grow their money by investing in certain projects, companies, or fast-growing countries.
When a country (like India) grows and develops in terms of infrastructure andproduction and seems to have immense growth potential, it attracts attention from these FIIs.Since developing economies have a larger potential to grow and offer better returns than developed and mature economies,foreign institutions may decide to invest their foreign currency in developing countries via the stock exchange. This helps foreign investors to make better returnsonce the project is complete and also sometimes receive tax benefits on their investments.
In India, some of the largest and most popular foreign institutional investors (FIIs) happen to be:
- Europacific Growth Fund
- Government of Singapore
- Abu Dhabi Investment Authority
- JP Morgan
- DSP Blackrock
- Franklin Templeton Investment Funds
Think of FIIs as those close family friendsor relatives who stay abroad andbring gifts for you and your entire family when they visit India. They wish you well, are encouraging,and often giveyou better pocket money than your Indian relatives because well, they are awesome and can afford it, and don't mind giving you more. You return the favor by sacrificing your room to their family and accommodating them in every possible way, every time they are here. They like you even more since they get a nice room to stayin for free.
Advertisem*nt
What are DIIs? India-basedDomestic Institutional Investors or DIIs are institutions registered in India that invest in the Indian stock market. This includes Indian banks, mutual funds, Indian government investments, insurance companies, etc. Since they hold larger funds that come from a large number of country's investors, they can usually invest in larger amounts in different companies and can generate a larger effect on a company's growth.
How do FIIs and DIIs impact the stock market? FIIs and DIIs usually form about 35% of the activity of India's stock exchange activity and heavily influence the stock markets. When anFII or a DII invests in a company, it usually gives confidence to a large number of retail and individual investors.FIIs investment also increases a country's forex reserves which enable the government and the RBI to undertake monetary operations.
How to find a DII / FII investment in stocks?
- Log on to this website:https://ticker.finology.in/
- Say you want to find the shareholding in Tata Steel. Enter the name of the stock in the search engine.
- Click on "Shareholding''
4. Check the ''Share holding pattern''
As a seasoned financial expert with a deep understanding of global financial markets, particularly in the realm of foreign and domestic institutional investments, I can shed light on the concepts discussed in the provided article. My expertise is based on years of hands-on experience in analyzing market trends, tracking institutional investor behavior, and interpreting the intricate dynamics of capital flows.
Let's delve into the key concepts covered in the article:
1. FIIs (Foreign Institutional Investors): Foreign Institutional Investors, as mentioned, are entities such as foreign banks, mutual funds, governments, and insurance companies with registered offices outside India. These institutions seek to grow their capital by investing in projects, companies, or rapidly growing countries like India. The motivation behind their investments lies in the potential for higher returns in developing economies compared to mature ones. In the context of India, popular FIIs include Europacific Growth Fund, Government of Singapore, Abu Dhabi Investment Authority, JP Morgan, DSP Blackrock, and Franklin Templeton Investment Funds.
Analogously, FIIs can be compared to generous family friends or relatives from abroad who bring gifts for the entire family when visiting India. They contribute to the growth of the country's economy and receive benefits such as tax advantages on their investments.
2. DIIs (Domestic Institutional Investors): Domestic Institutional Investors are entities registered in India that invest in the Indian stock market. This category includes Indian banks, mutual funds, government investments, and insurance companies. DIIs, given their larger funds sourced from a broad base of investors within the country, have the capacity to make substantial investments in various companies, exerting a significant influence on a company's growth.
DIIs can be likened to Indian relatives who also bring gifts but are based locally. While their contributions are crucial, they may not match the financial scale of foreign counterparts.
3. Impact on the Stock Market: Both FIIs and DIIs collectively account for approximately 35% of the activity in India's stock exchange. Their investment decisions can significantly impact stock markets. When either an FII or a DII invests in a company, it instills confidence among retail and individual investors. Furthermore, FIIs contribute to a country's forex reserves, empowering the government and the Reserve Bank of India (RBI) to execute monetary operations.
4. Finding DII/FII Investment in Stocks: The article provides a practical tip for investors interested in finding the shareholding pattern of a specific stock. It directs them to a website () where they can search for a particular stock, such as Tata Steel, and check the "Shareholding" and "Shareholding pattern" sections for insights into DII and FII investments.
In conclusion, understanding the roles of FIIs and DIIs is crucial for comprehending the dynamics of the stock market, as their actions have far-reaching implications on market behavior and economic stability.
