In India too, jitters of upcoming recession
were felt with FIIs withdrawing Rs 12,684 crore from equity market in February
this year.
Foreign institutional
investors (FIIs) sold equities worth Rs 90,043.54 crore in financial year
2019-2020 against domestic institutional investors (DIIs) lending support to
Indian indices by purchasing equities worth Rs 1,28,208.24 crore.
These institutional
investors could not escape the coronavirus crisis which cast a shadow of gloom
across global markets. With rising number of coronavirus cases across the
world and global markets melting under the effect of economic contagion since
the second half of February, investors withdrew funds from risk assets such as
equities and parked them in safe haven assets such as gold.
In India too, jitters of
upcoming recession were felt with FIIs withdrawing Rs 12,684 crore from equity
market in February this year.
The incessant selling
continued in the next month with FIIs pulling out Rs 65,816 crore which proved
to be the worst sell-off ever for Indian markets.
The FII sell-off and
adverse market conditions across the globe in March weakened sentiment on
Indian benchmark indices which logged their biggest monthly losses ever.
While Sensex lost
8,829 points or 23.05%, Nifty fell 2,604 points or 23.24% in March.
The losses could have been higher for Indian indices had DIIs not come to the
rescue of Sensex and Nifty.
DIIs
purchased equities worth Rs 55,595 crore in March to minimise the impact of
carnage on Indian indices. When FIIs were leaving Indian markets, DIIs such as
LIC, public sector insurers and PSUs among others were infusing funds into
equities to cap losses in Sensex and Nifty.
In last fiscal, FIIs
remained buyers in 4 months, while DIIs remained sellers in 3 months.
Interestingly, FIIs were net sellers in each of last three months and DIIs
indulged in buying activity during the same period.
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