Foreign Institutional Investor (FII) is the name that comes quite frequently in headlines such as Nifty Falls 200 Points on FII Selling and other stock-based news. Even when the stock market crashed in the year 2008 millions of retail investors were stranded as FII pulled out their money from the market. FII hold responsible because the DII wasn’t strong enough back then. DII gaining in strength but still, FII plays a major role in the Indian stock market.
It is clear that DII supports market a lot but it is FII that has the capability to change the course of the market within a few minutes. If you don’t believe then go back and take a look at any major swing in the major indices of the domestic market, FII contribution has always been huge.
If FII pulls out from stock, there is nothing left to do for a retail investor. With their current strength, there is no way one can stop FII from buying and selling but there is one thing that we as retail investors can do is to know where the FII is buying or selling in the markets.
This will help you know when to enter and exit a stock.
But, that’s a different thing. Here we’re going to discuss how FII buying in stocks.
How to find out FII Buying in Stocks?
FII Trading Activity
If you don’t know the FII trading activity data published on daily basis by NSE India. If you are a newbie in the stock market and planning to do long-term investments then this FII trading activity data will help you in finding out which stocks are FII buying or selling. Generally, the FII invest in the frontline stocks listed on exchanges but if you are planning to invest in small-cap or mid-cap stocks it would still be wise to check the trading activity of FII.
It will only help you in checking the future trend of the stock.
Delivery and Volume Percentage
One can also know about FII buying by looking at the delivery and volume percentage of the FII. FII usually prefer to buy stocks of a big company who is leading in its respective sector where they can expect good growth in the distant future. So, the data on FII buying any big shares lead to a rush in its volume and delivery percentage.
When FII bullish in any sector, they usually invest in stocks that show most future potential and can give a hell of a return in the long run. The FII trading data will help you in picking the potential sector to invest in. Although nothing is permanent and the list of potential sectors can change with time.
Despite all, the FII trading activity data is helpful in picking the right sector to enter the market.
Last but not least, the quarterly reports of the company which released on every quarter of the week help in understanding the involvement of FII in a company’s stock. The stock prices tend to increase if the FII heavily buying. With the help of quarterly reports, the investors can know of what stocks FII are buying. But, don’t forget that there is no guarantee that the stocks FII buying shall perform best from the rest. It is just one of many ways to get insights on whether to invest in stock to make a long-term investment.
Nevertheless, we would recommend you to perform the fundamental analysis of the stock as well.