What Are FIIs And DIIs? How They Affect Stock Market

In India, a lot of people invest in the stock market. The stock market is one of the most popular ways for people to invest their money and receive good returns. However, it is important to do proper research before investing in the market, as it is quite volatile. There are different types of investors in the market. Among them, FIIs and DIIs are the most popular types. It has been found that FIIs and DIIs involve huge trading in the market. They invest in thousands of crores in the stock market. It is believed that a smart investor would always look at the activities of FIIs and DIIs before investing money. So, let’s take a look at what FIIs and DIIs are:

FIIs: FIIs refer to foreign institutional investors. These are people who are not citizens of India but invest in the Indian stock markets. These are foreign institutional investors, such as mutual fund houses or insurance companies, who can invest their money in the stock markets of any country. But they have to follow the rules of the local stock market.

DIIs: DIIs refer to domestic institutional investors. These include mutual fund houses and insurance companies in the country. Both FIIs and DIIs have to register with the Securities and Exchange Board of India (SEBI) before operating in the Indian stock market.

Both of these institutional investors have huge capital with them, and they play a big role in giving direction to the stock market.

Market bulls: FIIs and DIIs are called market bulls. This is because when the stock market has continuous capital inflow from both FIIs and DIIs, it becomes bullish. Institutional investors invest money in shares of small, medium, and big companies. They put money in only those companies that have strong fundamentals.

Bears in the market: FIIs and DIIs can also become bears in the market. It can be an important indicator for other investors to understand that when the market is falling, it means that either FII or DII are selling their shares. Their selling indicates that the market will be declining.

At times, it has also been noticed that both FIIs and DIIs behave at odds with each other. This means that when FIIs sell, DIIs buy shares. At the same time, when DIIs sell, FIIs become buyers in the market.