INDIAN STOCK MARKET

SMALL INVESTORS
OR
FII’s

WHO ARE BENEFITTED ???

GROUP NO : 12
SMALL INVESTORS
 SMALL INVESTORS
• Retail investors are considered as the backbone of the
Indian economy.
• Investors support the development of economy by
mobilizing their surplus resources through capital market
and other means of investments.
• As per RBI data, the small investors have put in around
2% of their savings in capital market.
• Retail investor is defined as the one who applies or bids
for securities of or for a exceeding Rs. 100000 as against
the earlier limit of Rs. 50000. However, SEBI has since
increased the limit for retail investors to Rs. 2 lakh.
• Retail investors are encouraged to provide the govt with
nore capital, through post office deposit schemes and
PPF.
• Govt reduces dependence on retail savings.
• RBI has started a new foreign exchange portal, where you
can buy forex directly. Facilitates to trade foreign
exchange and thereby reducing transaction cost for
everyone.
 EFFORTS MADE FOR GROWTH OF
RETAIL INVESTORS
• Nation wide access of trading terminals of BSE and NSE
• Stringer corporate governanace norms
• Increased participation of retail investors in IPO
• Stipulation of minimum public shareholding
• Launch of various schemes by mutual funds for retail
investors
• Introduction of dance settlement cycle
• Demat of shares
• Increase in minimum public shareholding
• Applicaion supported by blocked amount
 PERFORMANCE OF SMALL
INVESTORS
• They have sold stocks that on an average have
outperformed the market.
• 85 stocks small investors have consistently decreased
their stake in over the past five quarters
• Delivered 34.4% returns between March 2017 and june
2018
• Failed to identify good quality stocks
 GENERAL INFORMATION
• Number of investors in Indian depositories
• NSDL – 1,89,16,477 (DMAT accounts)
• CDSL – 1,85,24,606
FOREIGN INSTITUTIONAL
INVESTORS
 FOREIGN INSTITUTIONAL
INVESTORS
• Institutional investors most notably include hedge funds,
insurance companies, pension funds, and mutual funds.
• A foreign institutional investor (FII) is an investor or
investment fund registered in a country outside of the one
in which it is investing.
• The term is used most commonly in India and refer to
outside companies investing in the financial markets of
India.
• FII is any type of large investor who does business in a
country other than the one in which the investment
instrument is being purchased.
• In addition to the types of investors above, others include
banks, large corporate buyers or representatives of large
institutions.
• All FIIs take a position in a foreign financial market on
behalf of the home country in which they are registered.
• Countries with the highest volume of foreign institutional
investments are those that have developing economies.
• These types of economies provide investors with higher
growth potential than in mature economies. This is why
these investors are most commonly found in India, all of
which must register with the Securities and Exchange
Board of India to participate in the market.
 EXAMPLE
• A mutual fund in the United States sees an investment
opportunity in an Indian-based company, it can purchase
the equity on the Indian public exchange and take a long
position in a high-growth stock.
• This also benefits domestic private investors who may not
be able to register with the Securities and Exchange
Board of India.
• Instead, they can invest in the mutual fund and take part
in the high growth potential.
 OTHER INFORMATION
• Foreign institutional investors (FIIs) have always had a
soft corner for India. In the past decade, since they were
allowed to invest in India, except for one year, they have
been net buyers of Indian shares and bonds, pumping in
more than $17 billion till date.
• Even as retail investors are gingerly returning back to the
stock market, FIIs are on course to make 2003 their
biggest year, having invested $2.37 billion (around Rs
10,900 crore) in the Indian market since January.
WHY FII’s SWARMING TO INDIA?
• The Indian economy seems to be on a roll.
• The monsoons have been good.
• Indian companies have posted spectacular sales and profit
growth.
• Growth is across all sectors.
• Return on equity is rising by the day.
• The capital market reforms of the past two years had
added to India's lure.
• Conservative foreign investors, especially pension funds,
have traditionally stayed away from markets where there
are risks like fake and stolen shares, delay in share
transfers and long settlement cycles.
• Most shares have already been dematerialised, thus
reducing the risk of fakes.
• In 2001, Indian markets finally moved to rolling
settlements - where the trading cycle is reduced to a day -
and in two years has moved from a T+5 (where shares are
delivered or cash paid before the fifth day) to a T+2
(second day) cycle this year. This is faster than even
many developed markets.
• With equity mutual funds not seeing any great inflows
and retail investors still sitting on the fence, FIIs have
come to dominate the stock markets.
• Days when FIIs have not bought aggressively, the
markets have slid.
• This dominance is, however, expected to recede once
retail money comes to the market.
• On the other hand, a bigger presence of FIIs means more
depth to the markets, greater research and more
information to the investor.
 FOREIGN PORTFOLIO
INVESTORS/FII
• Foreign Portfolio/Institutional Investors (FPI/FII) have
been one of the biggest drivers of India’s financial
markets and have invested around Rs 12.51 trillion (US$
171.81 billion) in India between FY02-18.
• Highly developed primary and secondary markets have
attracted FIIs/FPIs to the country.
 RECENT INVESTMENTS
• In March 2019, initial public offer (IPO) of India’s first
real estate investment trust (REIT) was subscribed 2.6
times.
• In February 2019, net inflows from foreign portfolio
investors (FPI) in India reached a 15-month high of
Rs. 17,220 crore (US$ 2.49 billion).
• Union Bank of Switzerland (UBS) maintained its Nifty
target at 9,500 by March 2019.
• Morgan Stanley expects the BSE Sensex to reach 42,000
by December 2019 end.
• In September 2018, Embassy Office Parks filed the
papers for India’s first Real Estate Investment Trusts
(REIT).
 INFLOWS & OUTFLOWS
• Foreign institutional investors (FIIs) have been aggressive
on Indian equities in the first six months of 2019 despite
increased volatility and uncertainty around the elections.
• FIIs were net buyers of local equities worth $11.41 billion
between January and June, the most since the
corresponding period of 2014, when they had invested
forex worth $9.91 billion.
• In the six months ended December 2018, FIIs saw an
outflow of $3.78 billion. The outflow in January to June
2018 was $681 million.
• The inflows, however, did not kick start on a strong note.
FIIs were net sellers in Indian equities worth $75.35
million in January.
• The pace of foreign money inflows started picking from
February and, over the following five months, FIIs
invested $11.5 billion.
• In June alone, FIIs were net buyers of $231.45 million in
equities.
• Analysts say FII flows during February, March and April
were largely driven by global factors.
• The precursor of it was the shift in stance on monetary
policy outlook by various central banks, which led to an
improvement in global liquidity.
• On 31 January, the US Federal Reserve announced a
pause in rate hike, which was followed by China and the
European Central Bank providing stimulus for their
economies. This, along with expectations of a positive
outcome of the US-China trade talks, bolstered risk-on
sentiments among foreign investors who diverted huge
investments towards emerging markets.
• The pace of net inflows by FIIs has now slowed due to a
surge in crude prices, as well as rising tension in West
Asia between the US and Iran.
• Escalation in the trade war, too, put investors on
tenterhooks.
• With elections over and euphoria around it subsiding, the
focus will now be on the steps that the government takes
in order tobring the economy back on track. This, too,
resulted in the slowdown of flows.
• Foreign investors would have adopted a wait-and-watch
stance ahead of the budget announcement on 5 July. The
focus there would be on the government’s road map
towards fiscal consolidation, the fiscal deficit target, and
the steps it would take to propel economic growth.
• While investors are waiting for the government to opt for
fiscal stimulus in the upcoming budget, domestic liquidity
will be critical to maintain buoyancy in equities.
• In local currency terms, benchmark indices Sensex and
Nifty have risen 8-9% so far this year.
• In dollar terms, both Sensex and Nifty were up 9-10%
each so far in 2019.
• The MSCI Emerging Markets index and MSCI World
index are up more than 9% and 15%, respectively.
• India is being viewed as a potential opportunity by
investors, with the economy having the capacity to grow
tremendously.
• Buoyed by strong support from the government, FII
investments have been strong and expected to continue to
improve going forward.
AFTER THE UNION BUDGET 2019
• Investors have lost over Rs 6 lakh crore since the Union
Budget as foreign investors pressed the ‘sell’ button on
equities following the announcement of super rich tax.
• Indian stocks appear to be sinking gently into a bear
market hug, shedding around $149 billion in investor
wealth since 5 July when finance minister Nirmala
Sitharaman presented her Union budget.
• According to the latest data available with depositories, a
net sum of Rs. 7,712.12 crore has been pulled out from
equities during July 1-19. However, foreign investors
pumped in Rs. 9,371.12 crore in the debt segment during
the period.
• This has translated into a net investment of around
Rs. 1,659 crore in July so far into the capital markets
(both equity and debt).
• Though aggregate market value remains above $2 trillion,
aggressive selling by foreign portfolio investors (FPIs)
have driven benchmark indices Sensex and Nifty 6-7%
below their record highs touched in June on concerns
over tax proposals and disappointment over the budget
lacking adequate growth impetus.
 STOCK MARKET REACTIONS
• Apart from relentless selling by FIIs, muted results from
India Inc for June quarter, trade war, geopolitical
concerns and slowdown fears have affected investments.
• Persistent selling by foreign investors has pulled Nifty
below 11,500-11,400 and the index is now heading
towards 200-day moving average placed at 11,127. 
• The sell-off in smaller companies appears more severe.
Since their record highs in late 2018, BSE Midcap and
Small cap indices are down 25.2% and 35.4%,
respectively.
• Experts feel that the volatility is likely to continue for
some more time but investors should use the drop to buy
into quality stocks.
• There is a crisis of confidence due to uncertainty over
budget tax proposals. FPIs are selling while only
domestic investors are supporting the markets.
 IN THE COMING PERIOD
• FPI flows into the economy will depend on the
performance of key domestic macro-economic indicators
and policies pursued by the government.
THANK YOU