RECENT SELLING BY FII

FII SELLING THEIR INDIAN STOCKS

In December so far, foreign institutional investors (FIIs) have net sold shares worth Rs 13,470 crore. This is due to a combination of measures by central banks like the US Federal Reserve to tighten liquidity, strengthening of the dollar, and rising inflation. From march 2020 till mid 2021 , the central banks have been pumping money in the system by purchasing bonds from different commercial banks and institutions , which in result kept the interest rates low.

Now, the banks have started the pulling out of money slowly , increasing the interest rates . Due to which FII have no other option but to sell their holdings. When interest rates rise, companies’ profits shrink. As a result, investors are no longer willing to pay high valuations and start pulling money out.

FII selling heavily leads to huge selling volume within a short time period , due to which prices fall causing more panic among the small retail investors leading to further decline.

According to my research and analysis , these short term changes by the central banks which lead to small corrections should not bother the investors. I believe by the end of January 2022 , the markets would recover back and might touch new all time highs as the panic around has started minimizing and the FIIs have again started to take positions in the market.