I hope you might have heard about these two terms FII and DII somewhere like on Business TV channels, reporters claiming that FII and DII have started buying shares or selling shares, you might have wondered what are these FII and DII?, So in this article, we will explain the concept in detail.
FII and DII in the stock market are the investor class terms, FII means Foreign Institutional Investors and DII means Domestic Institutional Investors. The complete information on FII and DII is explained below with some examples too.
If you are making investments in the stock markets, you might have heard about different classes of investors. These classes range from retail investors, high-net-worth individuals (HNIs), domestic institutional investors (DIIs) to foreign institutional investors (FIIs).
All investors investing in equity markets are categorized in one of these classes based on the quantum of investments they make. In this article, we’ll explore foreign and domestic institutional investors and understand who they are.
Who are FIIs?
Foreign Institutional Investors (FIIs) are an institution of fund house that is situated outside India (or the domestic country). They are registered with the Securities and Exchange Board of India (SEBI) and make investments in the Indian securities markets.
Who are DIIs?
Domestic Institutional Investors (DIIs) are investors or fund houses based in the domestic country itself where they are investing their money. These include mutual fund houses and other large institutional investment funds.
Examples of FIIs and DIIs
Listed below are some of the examples of Foreign Institutional Investors in India:
- Government of Singapore
- Blackstone Group
- Euro Pacific Growth Fund
- Franklin Templeton Investments Fund
- TPG Group
- Sequoia Capital
Listed below are some of the examples of Domestic Institutional Investors in India:
- Life Insurance Corporation of India
- HDFC Asset Management Company
- ICICI Prudential Asset Management Company
- Aditya Birla Asset Management Company
- Nippon India Asset Management
- Employees Provident Fund Organization (EPFO)
- Quant Mutual Fund
- Mirae Asset Mutual Fund
- Kotak Mutual Fund
What role do they play in the stock market?
Institutional investors such as FIIs and DIIs play a vital role in deciding the direction of a nation’s stock market. As businesses need capital to fuel growth, these are the investors who provide them with the necessary financial resources so that the path to expansion/growth can be pursued by these companies.
They are known as market movers because their buying and selling quantities decide the market direction.
To be precise, stocks can be worthless pieces of paper after you buy it. This is because if demand from big institutions such as the FIIs and DIIs does not come, the stock will not experience significant upward price movements. A demand boost is needed for the shares to begin their upward journey. And this necessity is fulfilled by FIIs and DIIs.
The actions of these buyers are closely tracked by retail investors as they have the power to move the stocks they are transacting in. Also, since FIIs and DIIs are large investors, they have more information regarding a particular company’s business due to their resources. Hence, a buying interest in a particular company by these institutional investors can put that company on retail investors’ radar.
Lately, the DIIs have been catching up with the FIIs in terms of quantum of buying. This is evident from the fact that the FIIs have been net sellers in the Indian stock markets for the last six months, but irrespective of that, the stock markets have only inched up. This shows that the DIIs have been supporting the market sentiment by being net buyers. Such is their importance!
What is the full form of FII?
The full form of FII is Foreign Institutional Investors
What is the full form of DII?
The full form of DII is Domestic Institutional Investors