FII vs DII
What Are FII and DII?
FIIs are foreign investors or investment funds that invest in a country’s financial markets. FIIs invest in stocks, bonds, and other assets in India, influencing market trends. However, local mutual funds, banks, and insurance companies invest in domestic financial markets as Domestic Institutional Investors (DIIs). FIIs and DIIs respond to political and economic changes by affecting market liquidity and investment trends.
Types of FIIs and DIIs
International pension, mutual, sovereign wealth, hedge, and insurance funds are FIIs. Financial assets are their main focus and they invest short- to medium-term.
DIIs include domestic mutual funds, insurance companies, banks, NBFCs, pension funds, and ETFs. These investors stabilise markets with short- and long-term positions.
Key Differences Between FIIs and DIIs
FIIs originate from foreign entities, investing for financial returns and portfolio diversification. Their investments are typically short to medium-term and can cause market fluctuations. In contrast, DIIs invest for long-term wealth creation and retirement funds, often holding a more stabilising influence on the market. FIIs face investment limits, whereas DIIs have no such restrictions.
FII vs DII Trends in 2024
As of December 2024, DII ownership in NSE-listed companies reached 16.90%, while FII holdings declined to 17.23%, marking a 12-year low. Domestic mutual funds played a key role, investing ₹1.54 lakh crore. Despite the decline, FIIs still hold a significant share in Indian equities, though DIIs are closing the gap.
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