Indian Share Prices Soaring High - Courtesy FII

From the middle of April, the commodity price became softened. The gold price started its journey towards south. And other macro-economic data became favourable to India. All of these together posed a strong future prospect for India. As a result, FII assumed that next few years, India will be having good economic growth. With the GDP at 4.5 in the third quarter, it is assumed that it has bottomed out. Recent IIP data, combined with low inflation data has made this point strong.

But if you see, when FII has been a net buyer in the last one month, the DII or Domestic institutional investor has continuously sold in the equity market. Despite this fact, the stock market has crossed one after another resistance. Thus, again it is proved that Indian market is predominantly driven by FII. And now the question is how long the current rally will go on. From the middle of April, the Nifty rose from 5500 level to 6200. It’s a quite a steep rise of 700 point with in a span of one month. However, the momentum is not driven by value any more. It is driven by liquidity. The strong liquidity flow has kept the momentum intact. From this point, the market is more likely to be corrected but it is expected to bounce back soon.