FII and DII are two types of prominent players in the market and critical for maintaining market liquidity. Over the past years, an important change in the ownership pattern of Indian equities is underway where the control is gradually shifting from FIIs to DIIs.
So, What Are FII And DII?
FII stands for foreign institutional investors or portfolio investors. They are investors from other countries who put their money in Indian stocks. These are foreign banks, sovereign wealth funds, pension funds, mutual funds, investment trusts and the like.
DII are the domestic institutional investors comprising local mutual funds, banking and financial firms, domestic pension funds, insurance companies, and more.
FIIs look at the global market when domestic investors look at the domestic market. DIIs are essential for strengthening the domestic market, especially in the Indian market where participation is low, domestic institutional investors improve market liquidity by investing in larger chunks of equities.
FII and DII are essential as the key driving forces of the market. When one is the buyer, the other turns seller, and the opposite. Inflow and outflow of FII and DII corpus are indicators of broader market trends. Usually, FIIs has a strong influence on the domestic market. However, in recent time, DIIs made a strong mark in the market. The outflow of FII funds got offset by the growing participation of the domestic institutional investors.
Often investors follow FII and DII trading activities to form investment decisions. Angel One FII/DII list offers a glimpse of tradings done by FII/DII investors during a day.