The full form of FII is Foreign Institutional Investors.
Foreign = Non-Indian
Institutional = Companies or Organisations.
Investors = Those who invest.
A Foreign Institutional Investor (FII) is an investment fund or organisation which is registered in the country outside the one in which it is investing in.
In the Indian stock market, any entity established outside India is considered to be Foreign Institutional Investor.
For example, there are mutual funds in India which invest in the United States stock market. Similarly, there are individuals in United States, who invest in ‘Emerging Markets’ fund.
‘Emerging Markets’ are countries like India, Brazil etc where there is tremendous potential for growth in the economy.
So when a mutual fund from Unites States or any other country buys shares of Reliance, HDFC Bank or any other company – that will be considering as an investment from an FII.
These can be overseas insurance companies, foreign mutual funds, hedge funds, Sovereign Wealth Funds, Trusts, Asset Management Companies or even governments of other countries.
Some examples of FII – Morgan Stanley, Vanguard, First State Investments, Abu Dhabi Investment Authority, Government Of Singapore, HSBC, CLSA.
FII Buying and Selling Data
FII’s participate in the market by buying and selling stocks. At the end of the day, the data is released on websites of stock exchanges like NSE and BSE.
The following data is of 31st March 2020:
|Buy Value||Sell Value||Net Value|
|DII||6,955 cr||3,379 cr||3,576 cr|
|FII||6,295 cr||9,340 cr||– 3,045 cr|
In the table above, ignore the numbers from DII (Domestic Institutional Investors). You can follow the link and read more about them.
On 31st March 2020, FII’s have bought shares worth ₹ 6295 crore and sold shares worth ₹ 9340 crore. The net difference was ₹ 3045, which they took out of the Indian market.
When small individual investors like you and me (also known as retail investors), buy or sell shares in the stock market – we cannot make much difference to the share prices. That’s because our quantity is usually too low.
But when institutional investors buy, they invest huge amounts of money. This can increase the demand significantly. When demand is more and the supply (sellers) is less, the price of stocks rise.
But the opposite also holds true. When FII’s sell in big numbers, it can have a hugely negative impact on the stock market.
In the recent Coronavirus-led market crash, FII have been selling heavily. This has resulted in the market crashing by more than 40%.
For daily activity data on FII buying and selling, you can visit the NSE Website.