Domestic Institutions pump over Rs2 trillion to support the market in 2022

14 Jun 2022 , 08:24 AM

So far in 2022, domestic institutional investors (DIIs) have invested over Rs2 trillion in the Indian stock market. With six and a half months left in the year 2022, DII equity market investments are at their greatest level in a single calendar year.

According to analysts, investors have taken advantage of the market’s correction, which has been shaken by rising inflation, surging crude oil costs, and geopolitical tensions.

Furthermore, although foreign institutional investors (FIIs) have been net sellers for 16 months in a row, DIIs have been net buys for 16 months in a row. According to a report by Jefferies India, Indian households save roughly Rs53 trillion each year, with an added annual equity allocation of Rs2.52 trillion at the current rate of equity allocation in household savings (4.80%). SIPs in mutual funds alone account for more than Rs1.44 trillion in annual contributions.

In addition, the Employees’ Provident Fund Organisation (EPFO) is investing around Rs25,000-30,000 crore in equities markets as part of its 15% equity market allocation. According to a recent news report, the government is reportedly considering progressively increasing EPFO’s allotment to 20%. If this idea is approved, more money will pour into the Indian equity markets. However, there is no information on how much money banks and insurance firms have invested in the stock market.

Meanwhile, FIIs have sold $23.87 billion in domestic shares this year, citing increasing crude prices as a source of concern about rising inflation and the fiscal deficit. The Sensex and the Nifty have both lost about 9.2% this year. The US Federal Reserve will meet on Wednesday, and it is likely to keep hiking rates in the face of rising inflation, while the Bank of Japan’s two-day meeting will end on Friday.