Chart Beat: DII inflows into Indian equities highest since April 2020

India's key benchmark index Nifty50 hit a new peak in March and ended 1.6% higher over the previous month. Investors tend to re-balance their portfolios as the financial year draws to a close in March, so analysts generally caution about increased volatility in the Indian stock market.

Nonetheless, the influx of funds, despite corrections seen in the small and midcap counters, has helped overall market sentiment. Domestic institutional investors (DII) remain committed with the eighth consecutive month of inflows in March 2024 at $6.8 billion.

This is the highest reading since April 2020, according to Motilal Oswal Financial Services. Foreign institutional investors (FIIs) too were net buyers in Indian equities in March, but recorded relatively lower inflows of $4 billion. Motilal Oswal data showed that DII inflows into Indian equities in CY24 year-to-date continued to be strong at $13.1 billion versus $22.3 billion in CY23.