• Domestic institutional investors (DIIs) have injected over Rs 1 lakh crore into Indian equities in October, offsetting foreign institutional investors (FIIs) selling.
• Despite weak market sentiment due to global uncertainties, strong domestic macros and sustained DII activity have kept the market robust.
• The market is showing a trend of strong stock-specific action, rewarding good results and punishing poor ones.
• The record-breaking DII investment and potential for economic recovery in H2 FY25 highlight the resilience of the Indian market amidst global volatility.

In an unprecedented move, domestic institutional investors (DIIs) have injected over Rs 1 lakh crore into Indian equities in October. This substantial investment comes at a time when foreign institutional investors (FIIs) are heavily selling, thereby maintaining the robustness of the stock market in comparison to its global counterparts. The sustained DII activity is a response to the cumulative foreign portfolio investor (FPI) selling in equity through the Indian stock exchanges, which stood at Rs 102,931 crore till October 24.

The DII investments have been around Rs 4.41 lakh crore, with two more months to go, driven by growing retail participation through mutual funds. This surpasses the previous highest recorded monthly DII inflows, which were registered in March this year, at about Rs 56,356 crore. Market experts attribute these inflows to SIP contributions, insurance, and retirement fund flows.

However, the market sentiment has turned weak due to escalating tensions in the Middle East and uncertainty regarding the outcome of the US presidential elections. This has led to the expectation that FPIs are likely to continue their selling in the near-term. On October 30, FIIs sold equities worth Rs 4,613 crore, while DIIs bought equities worth Rs 4,518 crore.

Market Trends and Economic Indicators

Despite these challenges, domestic macros are largely favoring the market. The unveiling of strong Purchasing Managers' Index (PMI) data and a robust economic growth forecast by the Reserve Bank of India (RBI) for FY25 have been encouraging. The resilience of recent manufacturing data suggests the possibility of an economic recovery in H2 FY25, which should encourage investors to accumulate quality stocks.

A significant trend in the market is the strong stock-specific action. Better-than-expected results are responded with sharp moves up to 20 per cent a day while worse-than-expected results are met with around 15 per cent correction. This trend of strongly rewarding good results and punishing poor results equally strongly is a reflection of the focus on stock-specific action rather than focus on the benchmark indices and market as a whole.

In the broader market scenario, the two major equity benchmark indices opened lower on Thursday, with the Nifty hovering around 24,300 amid weak global cues. This decline reflects concerns in international markets, which are influencing investor sentiment domestically. At 10 am, the Sensex was down by 202.15 points, or 0.25 per cent, at 79,740.03. Meanwhile, the Nifty fell by 47.80 points, or 0.20 per cent, to 24,293.00.

Global Influences and Market Outlook

The market sentiment was also impacted by the US GDP data, which showed the economy grew at a 2.8 per cent annualized rate in the third quarter, along with stronger-than-expected private payroll numbers. India's eight core sectors showed signs of improvement, posting 2 per cent growth in September after contracting 1.6 per cent in August. However, the government's fiscal deficit expanded to 29.4 per cent of the budgetary target in the first half of FY25.