Mumbai, May 30 (AHN) Domestic institutional investors (DIIs) staged a historic defence of the domestic stock market, injecting a staggering Rs 82,668 crore in May, as foreign institutional investors (FIIs) continued their selling.

The massive capital cushion completely absorbed an 11-month relentless selling streak by FIIs, who offloaded Rs 55,963 crore over the month, signalling a significant shift in market liquidity dynamics.

This monthly tug-of-war was vividly mirrored in the final week’s trading data.

“FIIs extended their exit, offloading a net Rs 23,734 crore over the four-day period. Acting as the ultimate market anchor, DIIs stood firm by accumulating Rs 25,503 crore. DIIs, by contrast, maintained a flawless buying streak every single day,” said Pabitro Mukherjee, Deputy Vice President-Technical, Bajaj Broking.

According to analysts, the primary catalyst for this large-scale withdrawal has been escalating geopolitical tensions in West Asia, which have heightened global uncertainty and risk aversion.

This has been compounded by several macroeconomic pressures such as weakening Indian Rupee, higher crude prices.

Indian equity markets navigated a relatively stable but eventful week, with sentiment improving as easing geopolitical tensions and a sharp correction in crude oil prices helped revive risk appetite.

Optimism surrounding progress towards a potential US–Iran truce reduced concerns over energy supply disruptions and supported a more constructive tone across global financial markets, said analysts.

FIIs remained cautious throughout the week and largely maintained a net selling stance. In contrast, DIIs continued to act as a stabilising force for the market.

Strong domestic participation helped absorb a substantial portion of the foreign selling pressure and prevented sharper downside moves in benchmark indices, said Ponmudi R, CEO, Enrich Money.

According to experts, institutional flows in the coming month are likely to remain sensitive to developments around US–Iran tensions, oil-price trajectories and RBI monetary policy outcome and progress of the monsoon.

—AHN

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